GBP/USD – corrective rally at the mercy of Fed

Corrective rally in the GBP/USD pair is at the mercy of Yellen’s speech at Jackson Hole as Fed chairwoman’s remarks could single handedly narrow/widen the bond yield spread.

GDP figures could be ignored

Markets may ignore second quarter GDP data release in UK and US, although a significant downward revision of either figure could weigh over the respective currencies.  

Markets expect Yellen to come out slightly hawkish although it will be very difficult for her to take sides – hawkish/dovish, given we are just a month away from US elections. An outright hawkish stance could derail the recovery in GBP/USD, while markets are likely to read neutral/data dependent stance as dovish one, thus helping Cable extend its post Brexit recovery.

GBP/USD Technical Levels

The spot was last seen trading around 1.32 levels. A break above Asian session high of 1.3216 could yield a rally to 50-DMA level of 1.3278, above which psychological level of 1.33 could be put to test. On the lower side, a break below daily low of 1.3185 would open doors for 1.3115 (10-DMA). A violation there could see the pair test support at 1.30 handle.