The GBPUSD pair is trading marginally lower on Friday, with widespread risk aversion has put the high-yielding currency under some pressure, while the greenback is licking its wounds after a bearish move earlier this week. The price failed to hold above the 1.34 threshold and turned red on the day, challenging the 20-DMA before the opening bell on Wall Street.
Meanwhile, the pound was unfazed by some interesting comments by BoE’s Ramsden who noted that persistently high inflation above the 2% target level creates a risk of failure of the MPC to meet its remit. In other words, one of the most cautious BoE members in fact highlighted the need for further rate hike down the road to combat the overshooting CPI.
Against this backdrop, next week’s inflation report will be important for GBPUSD as higher consumer prices will drive the sterling north across the board on the back of increase pricing in for an August hike. Therefore, after a corrective retreat, the price could resume the ascent and get back to the 1.35 area.
Great fundamentals, supporting some of the technicals, looking at the DXY, it's still looking bearish off its previous move high, and a retest of the 50% fib level is required before it makes a move higher, the Euro strength keeping the basket of currencies bearish v the US$.