Technical bulletin: Has the sterling rally done enough for now?

GBP has another push higher as wage inflation puts pressure on BoE for further hikes, but major technical resistance may force a near-term pullback.

  • Clear uptrend (series of higher highs and higher lows) underpinned by robust trendline support.
  • However, price action is approaching trendline resistance (red line and annotated above). A test of this trendline would be around 1.2940. A test here may induce a near-term retracement, within the context of the long-term uptrend.
  • GBP ‘pop’ this morning predicated on yet more wage inflation, which implies a need for an ongoing hawkish stance from the Bank of England…. However, of late, that has also been a sterling negative (as seen after the 0.5% hike on June 22nd!).
  • GBPUSD RHS may well get 1.2670 again if the retracement is seen.

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