Cable might need to consolidate

GBPUSD has had various boosts recently from a range of positive factors apart from lower American inflation. These include positivity around the new British government and better than expected British GDP. Overall expectations seem to be that the Bank of England will cut rates at its meeting on 1 August.

11 July’s intraday high around $1.295 was last seen in July 2023, so between this and a very strong overbought signal it’s questionable whether gains will continue at this pace. Most of the time, major forex pairs don’t sustain strong trends for very long. $1.30 is also an unusually talismanic psychological area which probably won’t be broken without some degree of retracement first even if sentiment and fundamentals hold similarly to now.

Dynamic support might come from the 20 and 50 SMAs which are both around $1.272. Although American retail sales for June are due on 16 July, the focus next week is squarely on British data. Cable and other pairs with the pound are likely to be volatile around British inflation on 17 July and the British job report the next day. Until then, the chart suggests reversion to the mean is more favourable than immediate continuation upward.

This is my personal opinion which does not represent the opinion of Exness. This is not a recommendation to trade.