- GBP / USD caught new bids on Friday amid strong selling around the USD.
- With Powell’s dovish comments on Thursday, the bullish market mood weighed on the USD.
- The bulls could now wait for a move beyond the 1.3300 mark before placing further bets.
GBP / USD has hit new highs since the start of the European session, with the bulls now waiting for a sustained move beyond the 1.3300 mark.
Following the rather volatile price swings the day before, the pair caught new offers on the last trading day of the week and was supported by the bearish sentiment surrounding the US dollar. Fed Chairman Jerome Powell on Thursday outlined the new monetary policy strategy and signaled increased tolerance for higher inflation.
During the much-anticipated speech at the Jackson Hole Symposium, Powell said the Fed is willing to allow inflation to get hotter than normal in order to support the labor market and the economy in general. The remarks suggested that the Fed may keep rates lower for longer, which in turn put great pressure on the greenback.
Apart from that, the optimistic mood that prevailed in the markets – exemplified by a strong rally in equity markets – further undermined the relative safe-haven status of the US dollar versus its UK counterpart. GBP / USD climbed to the highest level since December 2019 and did not appear to be affected by concerns about the lack of progress in Brexit negotiations.
In the absence of major economic releases to the market from the UK, USD price dynamics may continue to act as an exclusive driver of GBP / USD momentum. Later, at the start of the North American session, a second level US economic release will also be reviewed for some near-term trading opportunities.