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The GBP/USD pair has been retreating from the highs as the dollar takes a breather from falling. The US dollar is benefiting from a bounce in US yields, and sterling bulls are taking profits – but probably not for too long as the pound is set to storm higher after the calm, propelled by Powell and UK vaccines, FXStreet’s Analyst Yohay Elam reports.

See: GBP/USD to push higher towards the 1.4000 level – Westpac

Key quotes

“Federal Reserve Chair Jerome Powell spoke on Wednesday, reiterating his commitment to support the economy. He said that any upside move in inflation would likely ‘not mean that much.’ Powell also pledged not to instantly act ‘solely’ upon an improvement in employment. By committing to do more, Powell may keep bond yields and the dollar depressed.”

“The UK vaccination campaign has reached nearly 20% of the population, the highest in the Western world. While Prime Minister Boris Johnson asked for patience, the UK is heading toward opening the economy. Moreover, the pound may continue benefiting from upbeat expectations for fourth-quarter growth figures due out on Friday.”

“Resistance awaits at the new 2021 high of 1.3865 – which is a 34-month high. Further above, 1.39 and 1.40 are the next level to watch. Support awaits at the daily low of 1.3810, followed by 1.3750. The next cushions are 1.3680 and 1.3615.”