The cable is holding near the 1.30 barrier ahead of Powell’s speech

The cable maintained its strong stance on Monday, hitting a new yearly high and trading just below the psychological barrier of 1.30.

Over the past two weeks, the pair has made significant gains, although bulls may face challenges as they approach the 1.30 resistance level. Daily studies indicate overbought conditions, with the 14-day momentum indicator showing signs of turning south from very high levels in positive territory.

Market attention is focused on Fed Chairman Powell’s speech later today, with expectations for more insights into the central bank’s monetary policy. Recent data indicating a return of inflation towards the 2% target has bolstered expectations for a rate cut in September, pending confirmation from Powell in one of his final speeches before the July 30/31 policy meeting.

However, Powell may also suggest that economic conditions are improving, requiring further evidence before signaling a definitive rate cut. Such a stance would be hawkish and potentially negative for the pound.

The weekend’s assassination attempt on former US President and presidential candidate Donald Trump has sent shockwaves through the markets, adding an additional layer of uncertainty.

While technical indicators hint at initial signals of a reversal and a potential pullback, the near-term direction of the cable is likely to be influenced more significantly by upcoming fundamental events, such as Powell’s speech today and UK inflation data scheduled for Wednesday.

In a bearish scenario where the 1.30 barrier holds as resistance, the price could retreat towards robust support levels at 1.2860/30 (June 12 former high / rising 10-day moving average).

Conversely, a sustained break above the 1.30 pivot could lead to renewed upward momentum, targeting levels around 1.3100/41 (round-figure / peak from July 14, 2023)

Res: 1.3000; 1.3049; 1.3100; 1.3141
Sup: 1.2961; 1.2902; 1.2860; 1.2830