The Pound closed the Friday session having become the second best performing major currency of the week although there could be further gains in store for the coming days if studies of the charts and the market's evolving view on the Bank of England (BoE) outlook are anything to go by.
The Pound-to-Dollar rate continued a month-long consolidation early Friday from which it could eventually break to either the up or downside, although some strategists say that even in the event of a resolution higher, Sterling lacks the horsepower for another big rally.
Pound Sterling retreated from a strengthening Dollar on Thursday as concerns about the spread of China's new coronavirus lifted safe-haven currencies while weighing on their riskier counterparts, although the British currency was disproportionately impacted by reports of possible infections in the UK.
The Pound-to-Dollar rate's New Year sell-off could be over already according to some strategists, who say the momentum behind Sterling's January lurch to the downside has been disappointing and that risks are now tilted to the upside for the British currency.
Analysts at ABN AMRO - the Dutch-based lender and investment bank - say the Dollar will likely embark on a long period of decline in 2020, that should see the EUR/USD exchange rate recover to 1.16 and the GBP/USD exchange rate to 1.35.
The Pound ceded ground to the Dollar and underperformed all major rivals of late although the charts are flagging more downside potential ahead of jobs and PMI data due out this week, which will be key to the outlook for Sterling.
The Dollar turned higher in the noon session Thursday after U.S. retail sales figures surpassed market expectations for the month of December, reversing earlier losses and challenging the widely-held belief that the economy slowed in the final quarter.
The Pound was under the cosh again Wednesday as the probability of an imminent Bank of England (BoE) rate cut rose further and technical analysts are warning of downside risks to the British currency but the afternoon's eagerly-anticipated signing of the U.S.-China trade deal is a wild card for Sterling.