GBP/USD hits multi-year high post Powell dovish pivot above 1.3200

• GBP/USD jumps over 1% after Powell signals potential rate cuts, reaching its highest level in two years.
• Powell's Jackson Hole speech emphasizes data-dependent rate adjustments, with confidence in inflation returning to 2%.
• US Dollar Index (DXY) drops 0.80% to 100.71, while the US 10-year Treasury yield falls to 3.81%, reflecting market expectations for a September rate cut.

The GBP/USD climbed sharply during the North American session after Federal Reserve Chair Jerome Powell gave the green light to cutting interest rates, as he's confident that inflation is edging towards the central bank's 2% goal. The pair traded above 1.3200, at around new two-year highs, gaining over 1%.

GBP/USD hits new two-year highs above 1.3200

At his Jackson Hole speech, Jerome Powell said, "The time has come for policy to adjust," adding that the size and timing of rate cuts would be data dependent. He said he's confident that inflation "is on a sustainable path back to 2%," though he mentioned that risks in employment had tilted to the upside.

Meanwhile, traders of Fed funds futures had priced in a 33% chance of the Fed cutting its interest rates by 50 basis points at the upcoming September meeting.

In response to Powell's speech, traders dumped the Greenback, which, according to the US Dollar Index (DXY), has fallen 0.80% and exchanged hands at 100.71. At the same time, the US 10-year Treasury note yield dropped four basis points to 3.81%.

GBP/USD Price Forecast:  Technical outlook

From a technical perspective, the GBP/USD uptrend remains intact, but if traders fail to sustain the exchange rate above 1.3200, this could exacerbate a pullback. Buyers remain in charge, according to the Relative Strength Index (RSI), which despite being at overbought conditions, due to the strength of the trend, has not hit the 80 level. Therefore, the path pof least resistance is tilted to the upside.

The GBP/USD first resistance would be 1.3200. A breach of the latter will expose the year-to-date (YTD) high at 1.3230, followed by 1.3250 and the 1.3300 mark.

In the event of a correction, the first support for GBP/USD is seen at 1.3100. Once surpassed, the next support would be the 1.3045 July 17 daily high, previous resistance turned support, ahead of 1.3000.