The Pound Near July Highs: What Could Trigger a Breakout?

The slowdown in U.S. inflation and a cooling labour market have rekindled investor confidence that the Federal Reserve may soon begin cutting interest rates. As bearish sentiment towards the dollar dominates the market, key currency pairs have approached critical levels, the breach of which could spark new medium-term trends.

GBP/USD

Technical analysis of GBP/USD suggests the possibility of a retest of the July high at 1.3050, as a strong upward momentum has developed on the daily timeframe following a bullish engulfing pattern. If buyers manage to secure a hold above 1.3000, the price could extend towards last year's highs around 1.3140-1.3100. Conversely, a rejection from 1.3000 might lead to a corrective decline towards 1.2900-1.2800.

Key events for GBP/USD pricing include:

• Today at 20:35 (GMT +3:00): Speech by FOMC member Bostic
• Tomorrow at 09:00 (GMT +3:00): UK Public Sector Net Borrowing data
• Tomorrow at 21:00 (GMT +3:00): FOMC meeting minutes release

GBP/JPY

Volatility in yen pairs remains high. After a sharp rise in July, yen sellers have managed to regain some losses. Technical analysis of GBP/JPY indicates the potential for further decline, as a bearish harami pattern has formed following a bounce from 192.00. If yesterday's low at 188.30 is breached, the downtrend may continue towards 186.00-184.00. Should the price rise above 192.00, a deeper upward correction is possible.

Key news impacting GBP/JPY includes:

• Tomorrow at 02:50 (GMT +3:00): Japan’s Trade Balance (seasonally adjusted)
• Tomorrow at 02:50 (GMT +3:00): Japan’s Import and Export figures for July

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