GBP/USD Puts in Third Weekly Gain Ahead of BoE Meeting
Despite a consolidation into the weekend, the pound continues to strengthen against the dollar before a pivotal week of economic events.
GBP/USD pulled back on Friday, falling about 0.11%, following a rally this week that pushed prices to an 8-week high. Today’s losses were modest compared to this week’s price action, with the pair set to put in a gain of about 0.33% on the week.
The pound is up nearly 3% since its swing low from early November, which marked the lowest level traded since early April. Now on track for a third weekly gain, GBP/USD has retraced about 50% of its move off the July swing high, which marked its strongest level since 2021.
GBP/USD Daily Price history
Prices have stair-stepped higher since early November after a double bottom pattern formed. The 23.6% and 38.2% Fibonacci retracement levels have provided support from the double bottom pattern, with the price action around those levels being defined by bull flag patterns.
The pseudo 50% Fibonacci provided resistance this week to bulls, with Thursday’s intraday move failing to hold above the level. Coincidentally, this is also alongside 1.34, bringing into play some psychological resistance.
The 100-day exponential moving average (EMA) offered support on the latest period of consolidation that started last week, and now the 20-day EMA has nearly crossed above the 50-day EMA, suggesting that momentum is strengthening.
Overall, the trend is pointed higher for now, and some consolidation along the way makes sense. The Monetary Policy Committee of the Bank of England (BoE) meets next week, and they are expected to cut rates by a narrow margin. With inflation coming down recently and some softness in the labor market for October, we could see a dovish tilt, although the MPC will likely remain divided.
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