GBP/USD breaches fresh 31-month high as Pound rally continues

• GBP/USD got pushed into another multi-year high on Thursday.
• Broad-market Greenback weakness has bolstered Cable further.
• The Pound Sterling rally is continuing unabated despite a lack of UK data.

GBP/USD clipped another multi-year peak on Thursday, hitting a 31-month high bid 1.3434 as Cable gets pushed into the high end by broad-market Greenback selling. Risk appetite has swung back into the high end on the back of better-than-expected US economic figures, easing investor concerns of a potential economic slowdown.

The Federal Reserve's (Fed) recent 50 bps rate trim sparked an undercurrent of concern in global markets, with some investors spooked by the possibility that the Fed's jumbo rate cut might have been in response to a looming economic slowdown with the US. Fed Chair Jerome Powell insisted last week that the Fed's double cut was not a rapid response to potential recession data, but rather a pre-emptive move to help shore up the US labor market.

US Durable Goods Orders and week-on-week Initial Jobless Claims helped to bolster the Fed head's case, with both figure printing better than expected and the "soft landing" economic rhetoric holding steady. However, Friday's Personal Consumption Expenditure (PCE) inflation print will draw plenty of attention, and will be the real test of last week's Fed rate cut.

US Durable Goods Orders in August printed a flat 0.0% MoM, well below the previous month's revised 9.9%, but still beat the forecast of a 2.6% contraction. Initial Jobless Claims for the week ended September 20 also beat forecasts, printing at 218K versus the expected 225K and easing down from the previous week's revised 222K.

GBP/USD price forecast

With Cable continuing to grind through multi-year highs, little relevant technical resistance lies in the way of Pound bulls. However, an extremely one-sided push into the high end has left GBP/USD price action exposed to a potential downside snap as market velocity takes hold. A buildup of short pressure at the current region could easily shoot bids back below the 1.3100 handle and into the 50-day Exponential Moving Average (EMA) at 1.3076.

GBP/USD daily chart