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Feb 22 - 08:55 PM

GBP/USD - COMMENT-Sterling Marches North - Fed's Powell Key This Week

By Andrew M Spencer  —  Feb 22 - 07:51 PM

Sterling has outpaced the euro against the broadly softer dollar in 2021, making it the best performing major currency nL8N2KO6L7. While there are few reasons to fight the trend, dollar weakness is a significant part of GBP/USD gains, so Federal Reserve Chair Powell's Congressional testimony will be key.

Powell is expected to maintain his commitment to accommodative policy in remarks on Tuesday and Wednesday, as inflation remains subdued and real unemployment is close to 10%.
But he may push back againstthe recent rapid rise in Treasury yields nIfp7MbVSj- how hard he pushes back will likely determine how the USD and yields behave this week.

In the UK, Prime Minister Boris Johnson's cautious approach to easing the coronavirus lockdown has been well received nL8N2KS593, as the vigorous vaccination drive continues, with vaccines proving effective nL8N2KS34O.

Technically daily weekly and monthly 5, 10 and 21 moving averages trend higher - an unusual and very strong trending setup.
The next significant resistance is a viable target, at 1.4303, 50% of the 2014-2020 fall, with the 2018 high at 1.4377 just above.

Short term, a close below the 10-day moving average at 1.3929 would be a concern and below the 1.3813 21 DMA would suggest a deeper correction.

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gbp feb 23 Click here

Source:
Refinitiv IFR Research/Market Commentary

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