British Pound consolidates beneath 2006 high

After the mid-May to late-June decline that capped the British pound’s furious spring rally, bullish forces grabbed the reins of the British pound and drove the currency higher vs. the U.S. dollar to an early-August peak around $1.9100 — the highest reading in 2006.

After reaching this milestone, the pound/dollar (GBP/USD) shifted into consolidation mode. Activity has been relatively confined through Aug. 25, with prices remaining mostly between 1.8800 and 1.9000.

“The fundamental factors are quite positive for the pound,” says Brian Dolan, director of research at Forex.com, a division of Gain Capital. “We’ve seen a solid acceleration of Eurozone growth, and UK growth is resurgent on its own.”

Looking at the market’s action off the $1.91 area into late August, Dolan adds, “The pound had a sharp rally and is seeing a minor retracement. Abase is forming around $1.88 - 1.87 for the next push higher.”