The pair is up nearly 2% for the week, thanks in part to heavy sell-offs in the greenback yesterday as traders finally made up their minds after the Fed meeting. But the pound side of the equation itself is also doing quite well, with the currency boosted by warmer UK jobs news earlier this week here.
That’s keeping bets on another BOE rate hike alive, and markets are still uncertain about the Fed, so we’re seeing a bit of a divergence in fortunes for the dollar and pound. GBP/USD has now broken through resistance from its May highs and even moved above its 100-week moving average (red line):
This is a big win for the buyers and they are now targeting a move towards the 200-week moving average (blue line) around 1.2872. The key resistance point after that will be 1.3000.
The technicals are certainly good for buyers at the moment and with the dollar also softening elsewhere, there may be room for the rally to extend a little further.
The BOE will be the next key risk event for the pair in the week ahead, but is widely expected to deliver another rate hike, with a 25bps move fully factored in at this point.