The GBP/USD pair edged higher on Thursday, ending the day around 1.3775, not far from a daily high of 1.3787. The pair advanced throughout the first half of the day, supported by the better performance of equities and higher government bond yields. GBP/USD held on to gains despite the optimism deteriorated during the American session, with Wall Street struggling to post modest gains and Treasury yields edging firmly lower.
In the UK, BOE Deputy Governor Ben Broadbent hit the wires. Among other things, he noted that good prices will be “more likely to be pulling down than pushing up inflation in two years’ time,” partially blaming higher costs and their effects on inflation to bottlenecks. The country has a busy macroeconomic calendar as it will publish July GFK Consumer Confidence, June Retail Sales and the preliminary estimates of Markit PMIs.
The GBP/USD pair has room to extend its advance. The 4-hour chart shows that the pair advanced above a flat 20 SMA, stalling its advance a few pips below a flat 100 SMA. The Momentum indicator heads firmly north, while the RSI indicator consolidates at around 60, all of which support another leg north. Bulls will have better chances on a clear break above the 1.3800 level.
Support levels: 1.3630 1.3675 1.3620
Resistance levels: 1.3805 1.3850 1.3900