The dollar in general collapsed last week and it remains in trouble, despite the quieter tones so far this week. And GBP/USD is one of the charts that exemplifies this sentiment:
GBP/USD weekly chart
In a similar case for EUR/USD here, the pair also broke above the 200-week moving average (blue line) and cleared a major technical hurdle in the form of the 1.3000 mark. This is to set up the buyers with a good platform to build on in order to extend the bullish breakout from last week.
Regarding the major resistance hurdles, there is not much in the way of a stronger push for the pair to the upside.
However, I would like to stress that at the moment, traders seem to be focusing more on the dollar side of the equation. With this in mind, they are sharpening the divergence between the Bank of England (which appears to need to raise interest rates above 6%) and the Federal Reserve (which may see reason to start pausing rate hikes).
This is also one of the reasons why the British pound has maintained its strength against the dollar. But keep in mind that in the case of the British economy, higher rates may not necessarily translate into a positive factor for the pound sterling. As mentioned from last week:
“Tighter financial conditions will affect the economy more and if inflation continues to rise, there is an increased risk of a stagflation scenario. This will make it difficult for the Bank of England to deal with a soft landing and as it continues to raise interest rates on top of that, it increases Potential for a deeper downturn and maybe even something breaking in the economy.
At the moment, traders are not focusing too much on that but this is something to think about and may limit gains for the GBP going forward.”