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Oct 01 - 01:55 PM

GBP/USD - COMMENT- Sterling Rises From 2021 Low, Bulls Take Aim At 10-DMA By 1.3603

By Paul Spirgel  —  Oct 01 - 10:15 AM

Sterling extended its rebound for a second day on Friday, up 0.65% to 1.3563 after hitting a session-high 1.3570 with cable moving back within its daily Bolli envelope and setting up a potential test of the 10-day moving average.

The recovery from Wednesday's low nL1N2QX15H was bolstered by the UK September Manufacturing PMI beat versus preliminary indications nZRN002X0Z, though the slip from August's 60.3 reading may hint that future growth and inflation may be tempered by UK supply chain and staff shortages.

Rising inflation, currently at 4%, twice the BoE's 2% target, has ramped up hawkish BoE comments, with twopolicymakers calling for a halt to the asset purchase program as market expectations center around a rate hike in early 2022 0#FSS:.

Comments by Fed Chair Jerome Powell helped sterling and other currencies after he reiterated on Thursday his transitory view of elevated U.S.
inflation.

Afterthe falling 10-DMA by 1.3604, GBP/USD may encounter resistance at 1.3663, the 50% Fib of the 1.3913-1.3412 September dip.

A rise above 1.3663 would provide momentum for further gains toward the daily cloud base by 1.3758, with the Oct. 8 daily cloud twist in the 1.3780's attracting.

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Source:
Refinitiv IFR Research/Market Commentary

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