Target of 1.32 for GBP/USD – but will it get there?

The British pound is on a roll at the moment, with strategists predicting that it could well breach the crucial 1.32 level in its pair with the US dollar.

According to price chart action, it was the movement of the currency earlier in August past 1.3188 that placed the target of 1.32 on the cards.

An even more optimistic view of the currency’s potential suggests that it would hit 1.3520 at some point.

If this transpires, it would be its best performance since the day before last year’s general election in the country.

Analysts appeared to agree that if the currency were to go down in value, the 1.2980 level would be its likely lowest point.

However, it is also prudent to look at the wider fundamental context for the currency.

The pound was suppressed in the forex markets for a long period of time due to Brexit – and this still does pose some uncertainty.

Despite the distraction posed by the coronavirus pandemic, the UK is still facing challenges in this regard as it has not yet fully left the EU’s trading bloc.

It has to commit to a trade deal with the EU, or secure an extension to talks, quickly in order to avoid leaving the trading bloc on a secure footing.

Part of the pound’s recent positive performance lies in the fact that talks between the UK and the EU have now resumed.

According to hints from some figures in the bloc, progress has been made on some key battleground issues.

The Irish Taoiseach Micheál Martin made positive noises last week about the potential for negotiators on both sides to strike a deal.

It is believed that there could be some common ground on issues such as the future relationship between Britain and the European Court of Justice – a key sticking point so far.

In terms of the economic calendar, meanwhile, the currency looks set to face a fairly gentle week with no major shocks expected to occur.

One of the main events scheduled in will be a consumer price index release on Wednesday morning.

This will cover the month of July and is expected to come out at 6am GMT.

Year on year, it is expected that this will go up slightly from 0.6% to 0.7%.

Other key indicators of the health of the British economy are expected out in that timeslot.

One will be the retail price index for July, which is expected to show a change from 0.2% to 0.1% month on month.

Year on year, meanwhile, that same metric is due to show a similar slight uptick, but this time from 1.1% to 1.2%.

A house price index release for June is also expected in this slot.

It was last recorded at 2.1% on a year-on-year basis.

Forex Fraud Analyst Team

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