GBP/USD: Three dark clouds loom over cable, inhibiting any upside

GBP/USD has bounced from the triple bottom as the UK reopens. However, Brexit issues, US inflation and vaccine scares may curb bulls’ enthusiasm, Yohay Elam, an Analyst at FXStreet, reports.  

Pound bulls still have three hurdles to overcome

“Brexit issues: While the EU and the UK are reportedly nearing a settlement related to commerce in Northern Ireland, tensions remain elevated in the province. Colder weather may have prompted a pause in violence, but frustrations around the Brexit accord may reignite riots on the streets of Belfast. Moreover, British exporters continue suffering from non-tariff barriers.”  

“US inflation lifts its head: Producer prices shot higher in March, beyond the “base-effects” related to the bounce from pandemic-depressed costs seen last year. Jerome Powell, Chair of the Federal Reserve, noted that the US economy is at an ‘inflection point’ – on the verge of rapid growth. Will the Fed be forced to raise interest rates sooner rather than later? The greenback is gaining ground. So far, the pound has put up a fight against the greenback, but things may change.”

“Virus: The US and the UK are both vaccinating their populations at a rapid clip, but worries remain prevalent. First, cases continue rising in the US, especially in Michigan. In addition, a study published in Israel has shown that the Pfizer/BioNTech jabs are less efficient against the South African variant. If these worries persist, it could boost the safe-haven dollar.”