Cable touches the highest in a year, then pulls back. What’s driving the gains

The pound is higher for the fourth straight day today and reached a high of 1.3052.

That’s the best level since July 2023 as it narrowly rose above the July 2024 high of 1.3044. It’s since pulled back below that figure but not by much.

Cable has climbed in 8 of the past 9 trading days as the pair rides US dollar weakness and improving risk appetite. It comes as Treasury yields decline and the market grows increasingly convinced that the Fed can embark on an extended rate-cutting cycle to 3.00% or lower.

Next for the pound is the July 2023 high of 1.3142 and clearing that would mark the highs since March 2022. The post-pandemic high was 1.4240.

Zooming out to the weekly chart, there is a nice series of higher lows developing that could be supercharged with a break of the 2023 high. If that’s combined with a strengthening UK economy or some further stumble in the US and/or strong risk appetite, the pair could break higher in a big way.

This article was written by Adam Button at www.forexlive.com.