Pound Pulls Back Amid Dollar Strength, Losses Limited

Fundamental Analysis

* Pound Resilience: The Pound Sterling is weakening against the US Dollar due to a slight recovery in the greenback. Nevertheless, losses are constrained as the outlook for the British currency remains optimistic, supported by expectations of a less-dovish Bank of England (BoE). Investors believe the BoE will gradually lower interest rates. In a recent interview with the Kent Messenger, BoE Governor Andrew Bailey mentioned, “I do think the path for interest rates will be downwards, gradually,” expressing confidence that inflation will sustainably meet the bank’s 2% target. When asked about the potential neutral rate, Bailey avoided providing a specific figure but assured that he does not expect rates to revert to the historically low levels seen during the pandemic.

Technical Analysis

* Technical Breakout: : GBPUSD was recently traded lower following prior retracement from the resistance level 1.34050. However, MACD which illustrate diminishing bearish momentum signal suggests that the pair may rebound and trade higher from its recent lows.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head back towards 1.34050. Conversely, a potential reversal is also to be expected and the price could head back towards 1.32500.

Potential Risks

Looking forward, investors are anticipating the release of the US PCE inflation data for August on Friday, which may provide new insights into the Federal Reserve’s interest rate outlook.

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Monitoring

Stay updated on US and UK data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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