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Hello, dear traders!
Yesterday, the US dollar strengthened against the basket of major currencies. Meanwhile, the pound sterling fell against the greenback. James Bullard, the president of the Federal Reserve Bank of St. Louis, is believed to be behind the weaker sterling. Thus, Bullard said yesterday that the Fed should begin curbing its monthly stimulus efforts soon. If so, tapering should start at the end of this year. The market is now focused on Fed's Powell speech during the Jackson Hole policy symposium. If he coincides with Bullard's point of view, the greenback will continue strengthening.
As for Chair Powell's speech, there are two possible scenarios. On the one hand, he may unveil a tapering plan. On the other hand, Powell may not get into detail about the issue. Ahead of Powell's speech at the Jackson Hole symposium, market participants ignore any macroeconomic data. For example, US GDP for the 2 quarter was downwardly revised yesterday. This, however, did not prevent the US dollar from strengthening. Today, apart from Powell's speech, statistics on personal spending and income are scheduled for release in the US. It remains to be seen whether the market will react to these reports.
Daily
According to the daily chart, there is uncertainty in the market, which is quite obvious ahead of such an important event. Yesterday, the price closed below the red Tenkan-sen line and orange 200-day exponential MA at 1.3695. In addition, the quote closed below the important level of 1.3700. The market is solely focused on Jerome Powell's speech. It will become possible to set any targets only after the event. At the moment of writing, GBP/USD is trading around 1.3700. Given the importance of this day, the market may be extremely volatile. Support is located not in the 1.3675-1.3600 but at 1.3570. Resistance is seen at 1.3730, 1.3775, and 1.3800. It will become possible to make any trading plan on Monday taking into account Powell's comments and how the current week will close.
Good luck!
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