The GBPUSD pair continues its marginal ascent on the back of dollar retreat across the board. Safe haven demand has abated as trade-war worries have stepped back for now, which derails the greenback’s attractiveness. Besides, the buck is cautious ahead of the upcoming Fed’s Powell testament.
The pound has also received an additional boost from the UK wages data which came in at 2.5% in June, as expected, while the unemployment rate remained unchanged at the four-decade low of 4.2%. Despite the figures are not spectacular, the report confirms that the economy is quite ready for the BoE rate hike in August, which supports sterling demand.
However, as other important UK releases are due in coming days – CPI and retail sales – the pair’s near-term upside potential is limited. The price struggles to get back above the 1.33 threshold for the last seven days, and the downside risks remain as long as the pound remains below this local resistance level. The price needs to keep gains above the 20-DMA at 1.3220 in order not to lose the upside potential.
By Helen Rush
Senior Analyst at Capital Markets