GBP/USD has been retreating from the highs as US yields push the dollar higher. A retreat in US returns due to three reasons and the UK’s upcoming reopening may send the pound higher, Yohay Elam, an Analyst at FXStreet, reports.
Key quotes
“Bargain-seekers may jump back into bonds at current prices, lowering yields back from levels seen before the pandemic.”
“Consumer prices are hamstrung by the still-struggling economy. Around 10 million Americans are still out of work due to the pandemic and that cripples spending. Economists expect US Retail Sales figures for January to bounce after two miserable months but that may be wishful thinking.”
“The Federal Reserve is set to continue easing despite fears of higher inflation. The FOMC Meeting Minutes published later in the day will likely confirm the Laissez-faire approach to inflation – ensuring traders that the Fed is there to buy bonds, lower yields and support markets.”
“Prime Minister Boris Johnson is under growing pressure to bring as much economic activity as possible back to life. Moreover, the UK has delivered jabs to around 23% of its population and continues its immunization campaign at a rapid pace.”
“Support awaits at the daily low of 1.3860, followed by 1.3825, where the 50 SMA hits the price. Some resistance is at 1.39, the round number, and then by 1.3950, the 2021 peak. Further above, the psychologically significant 1.40 level looms.”
Share
