The pound has quietly emerged as the top performer among major currencies in trading this year. With a more stable economy and tamer inflation, the BOE’s plans to cut interest rates have been postponed. And that has helped strengthen the currency, with most other major central banks on track to cut rates further.

The last to fall in this domino was the dollar, which has struggled quite hard over the past two weeks. In turn, GBP/USD has seen a significant rise from 1.2800 to now above 1.3100.

And going into the weekend, buyers are currently targeting the 2023 high at 1.3142.

Another notable development in August is that we see a price move above its 100-month moving average of 1.2926. GBP/USD has struggled with its key monthly moving averages for a long time, since 2008, so a clear break here could well open up scope for a stronger push higher alongside the other technical levels highlighted above.

Ultimately, it will depend on the divergence between the BOE and the Fed. And of course, how quickly things converge once inflationary pressures in the UK come under control.

But with the dollar weakening in several charts, arguments against a weaker backdrop for the US currency are hard to imagine – at least for now.

Next, all eyes will be on Fed Chair Powell to see if he will deliver another blow to the greenback before the weekend.