**Pound to Dollar Forecast: Scope for GBP to Retest Resistance Near 1.36**
*Original Report by Tim Clayton – Adapted and Enhanced for Depth and Detail*
The GBP/USD pair, a key indicator of the relative strengths of the British pound and the US dollar, has shown resilience in recent trading sessions. Market participants are closely evaluating the potential for the pound to test resistance levels near 1.36 in the coming weeks, driven by a blend of fundamental economic data, shifting central bank policies, and global risk sentiment. This detailed analysis explores the prevailing factors influencing GBP/USD movements, outlines the technical and fundamental landscape, and provides insights into what to expect as the currency pair approaches critical resistance.
## Recent Performance and Context
The pound has staged a recovery against the dollar after navigating periods of volatility triggered by a mix of domestic and international developments. In early September, GBP/USD traded near the 1.3450 mark, rebounding from prior lows where risk-off sentiment and hawkish remarks from Federal Reserve officials had weighed on sterling. This move underscores a dynamic market environment where both currencies are being tugged by diverging policy expectations and economic data releases.
### Key Recent Catalysts:
– **US Federal Reserve Policy:** Persistent talk of tapering asset purchases and potentially higher interest rates in the US has supported the dollar but also increased market volatility.
– **Bank of England (BoE) Outlook:** The BoE, while more cautious, has hinted at the need for policy recalibration in the months ahead. UK economic recovery signals, despite a challenging inflation backdrop, have fueled some optimism for the pound.
– **Broader Risk Sentiment:** Shifts in global equity markets and investor appetite for risk have intermittently favored the dollar and weighed on sterling, especially during bouts of risk aversion.
## Technical Analysis: Is 1.36 Within Reach?
GBP/USD has demonstrated a capacity to rebound from support levels, with technical traders watching closely as the pair approaches the 1.36 resistance barrier. This zone represents a significant psychological and technical threshold, having acted as a ceiling in prior rallies.
### Technical Landscape:
– **Support Levels:** Recent lows near 1.34 have provided notable support, with buyers emerging at dips below this area.
– **Resistance Markers:** The 1.36 level looms large as intermediate resistance, with further barriers near 1.37 and 1.38 should momentum continue.
– **Momentum Indicators:** The Relative Strength Index (RSI), moving averages, and volume patterns suggest a consolidative phase, with a bias toward higher ground if key resistance is breached.
– **Chart Patterns:** A series of higher lows from August onward hints at growing bullish momentum, although gains remain contingent on broader market volatility.
## Fundamental Drivers: Diverging Central Bank Stances
The underlying fundamentals influencing the GBP/USD pair hinge on the relative policy trajectories of the Bank of England and the Federal Reserve.
### Bank of England:
– The BoE has maintained its base interest rate at historic lows but signaled that a tightening cycle is likely as inflation pressures mount.
– UK inflation reached above target, largely attributed to energy prices, supply bottlenecks, and base effects from a year ago.
– The UK labor market has shown signs of recovery, with wage growth and robust hiring supporting the case for tighter monetary policy later in the year.
– Comments from BoE Governor Andrew Bailey have supported market expectations for normalization, especially if economic data remains firm.
### US Federal Reserve:
– The Fed has taken a more hawkish tone, indicating plans to scale back asset purchases, possibly before the end of 2024.
– US inflation has remained elevated, prompting speculation around earlier-than-anticipated interest rate hikes.
– Employment gains in the US have been uneven, leaving the central bank some room for patience, but the rhetoric has generally favored dollar appreciation.
– Uncertainty around the Delta variant and its impact on US growth has moderated some of the Fed’s aggressive outlook, introducing
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