GBP/USD: Sterling Surges Beyond $1.31 in Powerful 7-Day Rally as Dollar Wobbles
Federal Reserve Chair Jay Powell’s speech at Jackson Hole will be crucial in determining whether the pound’s rally continues, with any surprises potentially reshuffling the forex landscape.
• The GBP/USD pair extended its bullish streak early Friday, reaching a new 2024 high of $1.3130. The powerful rally is now in its seventh consecutive day, but significant tests lie ahead for the sterling’s dominance. Jay Powell, Chair of the US Federal Reserve, is set to discuss interest rates and provide insights into the number of rate cuts investors can anticipate before the year’s end. His speech is scheduled for Friday morning at the Jackson Hole symposium.
• With this in mind, expect heightened volatility not only in the pound-dollar pair but across the forex market and global financial markets more broadly. If Powell delivers what the markets hope to hear — possibly even hinting at a larger 50bps rate cut at the September meeting, instead of the anticipated 25bps cut — the US dollar could find itself under pressure. Lower rates typically weaken the local currency as they reduce the yield on deposits.
• In other currency movements, the euro fell on Thursday but was attempting to recover early Friday. The EUR/USD pair advanced to around $1.1130 in the initial trades today. However, traders remained cautious as they awaited Powell’s potentially market-moving speech. Meanwhile, the USD/JPY pair remained flat for the week, trading near 146.00 as today’s session began.
