GBP/USD climbs to one-week highs at 1.3780 as USD holds onto losses

US dollar tumbles after Fed Chair Powell speech at Jackson Hole symposium.
Cable soars on Friday, trims half of last week’s losses.

The GBP/USD pair rose sharply on Friday and extended weekly gains. It is about to end the week hovering around 1.3765, up almost 150 pips from a week ago.

A sharp decline of the US dollar across the board boosted GBP/USD on Friday that reversed sharply from a multi-day low at 1.3679, to the highest since August 18 at 1.3780.

The speech from Fed Chair Jerome Powell at the Jackson Hole symposium left the USD vulnerable. He signaled some tapering before the end of the year, proving no specific timeline. “There has been clear progress toward maximum employment”, said Powell.

Powell’s comments boosted equity prices and US bond yields pulled back. The mentioned combination weighed on the USD.

Technical outlook

According to Yohay Elam, Senior Analyst at FXStreet, on the upside, some resistance is at 1.3770, a late-August high. “It is followed by 1.3810, which is where the 50-day and 200-day SMAs are bound to meet. More importantly, 1.3895 capped cable in mid-August and defends the psychologically important 1.40 level.”

Elam warns that if the GBP/USD retreats further, “the 50-day SMA is about to break below the 200-day SMA – what would consist of a “death cross pattern.” That would be a bearish sign.”