August is often dominated by range trading in the lead-up to the U.S. Labor Day holiday weekend on Sept 4-6, which is considered the end of the U.S. summer holidays.
Identifying the range correctly can create sterling opportunities.
The key factors driving the USD and the pound are the coronavirus and the pace of the economic recovery.
Both the U.S. and UK are opening up their economies, hoping that freely available vaccines will overcome the Delta variant.
This situation should extend for the next few weeks.
The U.S. and UK economies are experiencing a rebound as restrictions are lifted, so data in August is likely to be resilient in both countries, which supports a period of holiday season consolidation for GBP/USD.
Technically GBP/USD currently consolidates below 1.4000, capped by 1.3991, 61.8% of the June-July fall, and the upper 21-day Bollinger band, a good indicator of an overbought market, at 1.3998.
Daily signals are positive with 5, 10 and 21 daily moving averages climbing, and a 1.4000 break would initially target 1.4090, 76.4% of the June-July fall, which could prove to be the range top.
The gently rising 200 DMA at 1.3747, pierced briefly on the close in July for the first timein a year, may provide the range base.
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