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Aug 26 - 11:55 AM

GBP/USD - COMMENT-EUR Weakness Steals Focus From Dollar For Sterling Bulls

By Paul Spirgel  —  Aug 26 - 10:40 AM

GBP/USD rebounded from session lows by 1.3118 in early New York trade as euro weakness overtook dollar strength following unexpectedly strong U.S. durable goods nL1N2FS0L4 and could lend the pound further support if it continues.

Cable's gains came as a byproduct EUR/GBP's 0.55% fall. Euro specs appear to have been reducing extreme long positioning ahead of Fed Chair Jerome Powell's Jackson Hole symposium speech on Thursday nL1N2FR0VM.

With significant UK-specific economic uncertainties remaining, especially over deadlocked EU-UK trade negotiations, GBP/USD bulls would be wise to proceed cautiously.

GBP/USD remains mired in its recent 1.3266-1.3048 range, having tested support and resistance several times within the last 12 days.
The recent failure to move significantly below 10- and 21-DMA support in the low 1.31s suggests bulls may be gearing up for a test of last week's highs above 1.3225.

Continued euro weakness should help sterling, as did the dollar's summer slide. However, a sustainable bull run above recent highs, toward December election peaks by 1.3516, will need progress on Brexit as developed markets' central bank policy remains on hold.
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Source:
Refinitiv IFR Research/Market Commentary

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