- The GBP / USD reversal of 1.2610 was contained above 1.2550.
- The pound appreciated in a positive market climate, the dollar falling.
- FXStreet analysts see the current GBP rally capped at 1.2645 double peak.
The reversal of the British pound from the 5-week highs to 1.2610 was contained at 1.2550 and the pair remains stable, with the 2.5-month highs at 1.2645 at sight. Cable is about to appreciate 2.6% after a five-day rally, driven by a risky market that weighs on the US dollar.
US dollar weakens amid hopes for global recovery
GBP / USD continues to advance at a brisk pace as the US dollar loses ground against its major peers. The recent measures to reopen the main economies have boosted confidence in the global recovery in the second half, a sentiment which has pushed investors towards riskier assets.
In addition, US macroeconomic data, ADP employment figures showing a substantial drop in job loss in May and better than expected ISM non-manufacturing activity helped maintain positive sentiment, to the detriment of safe havens like the US dollar.
Book bulls remain weighed by the imminent risks of Brexit, however. With trade talks deadlocked, the Bank of England has warned the city to prepare for a Union exit without a deal, which counterbalances the strength of the pound.
GBP / USD: resistance at 1.2645 will cap the pound rally – Yohay Elam
FXStreet analyst Yohay Elam observes that the pound is entering overbought territory, unlikely to advance beyond the level of 1.2645: “The relative strength index on the 4-hour chart is greater than 70, pointing to overbought conditions and a potential fall. Cable is approaching the critical level of 1.2645, a double peak recorded in April. Reaching and crossing it seems unlikely in the short term. “