GBP/USD: Powell to rescue sterling from Boris' cautiousness

GBP/USD has been edging off the highs as US yields rise and ahead of PM Johnson's speech. A cautious UK reopening may weigh on sterling but remarks from Fed Chair Powell may down the dollar, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“According to the BBC's Laura Kuenssberg, a five-week gap will separate the lockdown lifting steps – a snail's pace in comparison to expectations. The promise of a slow exit from the lockdown is that it will allow vaccinating more people and also diminish the chances of having yet another shuttering of the economy. At the moment, Boris' lack of bravery seems to take the wind out of sterling's sails.”

“Powell is set to testify before Congress on Tuesday and his prepared remarks may be released already on Monday. If he reiterates the bank's willingness to do more and opens the door to expanded bond-buying, yields could fall and the dollar could rise. While he is unlikely to commit to new and imminent stimulus, Powell's commitment to do more may provide the next leg higher for GBP/USD.”

“The fresh multi-year high of 1.4052 is the first resistance level to watch. It is followed by 1.4145, 1.4255 and 1.4370, all date back to 2018.” 

“Support awaits at the daily low of 1.3980, then by 1.3950 and 1.39, which served as stepping stones on the way up.”