GBPUSD 4-hour chart
Today, the pound extended to 100 points, touching 1.2848 in a late week push. As the 4-hour chart above shows, buyers hit the June high of 1.2848 just before pulling back a few pips. The bulls may try to make another push late or in low liquidity at Monday’s open in an effort to reach a 15-month high.
Sterling is benefiting from a tightening Bank of England and high inflation. Ultimately I think this will prove to be playing with fire as some sort of accident happens if/when rates hit 6%. But for now, it’s all about spreads and shorting the US dollar.
Some stops already hit as 1.2800 pulled back but with some real resistance above, the shorts have a good argument here.
Despite this, the US dollar is being sold off heavily in anticipation of next week’s CPI report. I also have to wonder if there are concerns about Japanese intervention or change from the Bank of Japan as a factor.