The GBP/USD inched up 0.2% on Friday to close at 1.5642 dollars per-British pound after the Federal Reserve said that July U.S. industrial production increased 1.3% year-over-year, compared to a 4.8% increase in July 2014. The June U.S. industrial production was revised downward to a 1.3% increase, the slowest pace since July 2013. U.S. industrial production has been decelerating sharply, from a 4.5% increase in January to the current level of a 1.3% gain, according to Federal Reserve data.

Separately, the Thomson Reuters/University of Michigan preliminary August reading of the U.S. consumer sentiment index came in at 92.9, lower than the previous month's reading of 93.1, and missing the Reuters' estimates for 93.5. U.S. consumers might not be in a good mood as their wages and salaries seemed to go nowhere, despite a tight labor market. The Labor Department said last month that the employment cost index (ECI), the broadest measure of labor costs, edged up just 0.2%, the smallest gain since the series started in the second quarter of 1982. 

For the week, the cable gained 0.95%, due in part to the renminbi devaluation by the People’s Bank of China (PBoC). The PBoC’s move to devalue the renminbi could have caught some hedge funds by surprise. Hedge funds, who were piling on euro short positions, might have had to sell the dollar to cover their positions. According to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on August 14, leverage funds have decreased their euro FX net short positions about 2,506 contracts, worth about 313 million euros, from the previous week, where euro FX contracts are traded in units of 125,000 euros. 

Hedge funds could have reduced their exposure to the British Pound as the net long positions have decreased about 6,831 contracts from the previous week, where British Pound contracts are traded in units of 62,500 British pounds. As of August 11, there are 27,180 short positions of the British Pound, traded on the Chicago Mercantile Exchange (CME), by leveraged funds, compared to about 66,185 long positions.

The weakening dollar could also be attributed to the U.S. Job Openings and Labor Turnover Survey (JOLTS) report, released by the Department of Labor on Wednesday, saying that the number of job openings rose to 5.25 million on the last business day of June, down 100,000 from the revised 5.35 million in May, missing economists’ forecast of 5.35 million job openings.

The quits rate, which measures workers who voluntarily resign, held steady at 1.9%, meaning workers aren’t quitting their old job for a new one despite that job openings are at a near record level. The Federal Reserve likes this report because it helps confirm the trend in jobs.

Technically, the GBP/USD was trading in a symmetrical triangle since May. The GBP/USD will have to either break out to the upside or break down to downside as the currency pair approaches the tip of the symmetrical triangle. It should be pointed out that a golden cross, where the 50-day SMA crosses above the 200-day SMA, emerged at the end of June. Hence, the long-term bet on the cable should be technically on the upside. The argument for a weaker dollar will be that the trade gap between the U.S. and China is expected to widen further as a result of the yuan devaluation.

The GBP/USD could be facing a downside risk if the Bank of England decides to delay the interest rate hike as U.K. unemployment ticked up in the second quarter and wage growth slowed. According to the Office for National Statistics (ONS), the number of people looking for work increased 25,000 to 1.85 million, while employment declined by 63,000 in the period. The jobless rate now held at 5.6%, while the employment rate rose from a year earlier, to 73.4%.