The British Pound remains resilient around the 1.3650 zone against the US Dollar in European trading, retaining its upward bias despite softer-than-expected retail sales data from the UK. The currency pair continues to draw strength from broad-based US Dollar weakness following liquidity management steps taken by the US Treasury, positioning GBP/USD for a potential test of the 1.3700 barrier.
British Pound Momentum and Key Technical Levels
Short-term technical observations show GBP maintaining positive traction after reaching a high of 1.3661. In recent trading, the pair closed 0.19% higher at 1.3632. Although momentum indicators show deeply overbought conditions that could constrain initial gains within a 1.3605 to 1.3670 trading band, the underlying bias remains constructive. Market analysts note that even if GBP clears 1.3670, immediate extension to the major 1.3700 resistance may require further consolidation.
Over a multi-week horizon, the bullish trajectory established when spot traded near 1.3540 on August 17 remains intact. Having cleared intermediate hurdles at 1.3600 and 1.3655, the pair is eyeing the 1.3700 psychological mark. To sustain this upward momentum, GBP must hold above the revised strong support level of 1.3570. Live market data shows GBP/USD trading near 1.37 with a 14-day RSI of 70 indicating overbought conditions and a bullish MACD histogram at 0.01. Key moving averages, including the 20-day EMA at 1.35 and 50-day EMA at 1.34, confirm an ongoing medium-term uptrend.
US Treasury Buybacks and Dollar Weakness
The primary driver of the weakness in the US Dollar stems from an unprecedented operational adjustment by the US Department of the Treasury. On Wednesday at 12:32 GMT, the department announced plans to double liquidity support buyback operations for 10-year to 20-year and 20-year to 30-year sector Treasuries. Maximum buyback volume per operation will increase from $2 billion to at least $4 billion, effective September 9 through November 4.
This shift occurs amid broader turmoil in fixed-income markets, where long-term government bond yields across the US, Europe, the UK, and Japan have surged to multi-year high benchmarks not observed in over a decade.
Euro Performance and German PMI Data
In parallel currency movements, EUR/USD consolidated its weekly gains near the 1.1700 handle. Mixed Purchasing Managers' Index (PMI) prints out of Germany weighed on sentiment, but persistent Dollar weakness enabled the Euro to hold its ground. Market participants are awaiting preliminary August PMI surveys for both the Eurozone and the US to gauge the path of economic expansion.
Gold Rally and Federal Reserve Policy Expectations
Precious metals have also capitalized on Dollar soft spots. Gold maintained modest gains above $4,550 per ounce, holding near its highest levels since early June. The commodity built on breakout momentum above its technically vital 200-day Simple Moving Average.
Traders adjusted their monetary policy expectations downward after recent US inflation data pointed toward cooling price pressures. Reduced bets on immediate Federal Reserve rate hikes have provided additional support for non-yielding assets like Gold while keeping pressure on the US Dollar.
