GBP/USD looks to solidify breakout move on the week

<p>They are getting help from the added dollar selling this week, with the greenback now stumbling all across the board after the softer US CPI data yesterday. GBP/USD is now up 0.5% today to 1.3050 levels and a hold above the 1.3000 mark will give buyers more impetus in chasing a stronger move to the upside.</p><p>From a technical perspective, cracking through the 1.3000 mark as well as the 200-week moving average (blue line) of 1.2882 is a massive win for buyers and that will see little in the way of a potential push towards 1.3200 or even 1.3500 next.</p><p>While markets are still seeing the BOE needing to be more hawkish, the Fed is perhaps starting to see reason to pause and that is a divergence that could benefit cable even more than what we area seeing in the past two weeks.</p><p>However, just keep in mind that while the pound may look to benefit from that, it could end up being a double-edged sword.</p><p>Tighter financial conditions will weigh on the economy further and if inflation continues to stay on the high side, there is growing risks of a stagflation scenario. That will make it tough for the BOE to navigate a soft landing and as they continue to raise rates further, it increases the likelihood of a deeper downturn and possibly even something breaking in the economy.</p><p>For now, traders aren't focusing too much on that but that is something worth considering that could limit sterling's gains down the road.</p>

This article was written by Justin Low at www.forexlive.com.