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Jun 02 - 11:55 AM

GBP/USD - COMMENT-Sterling's 10-Day Avg Remains Magnetic As Support Above 1.41 Holds

By Paul Spirgel  —  Jun 02 - 10:38 AM

Sterling rebounded off a four-session low at 21-day moving average support near 1.4113, keeping intact recent bullish sentiment as cable remained in the neighborhood of the 2021 high of 1.4250 it struck in the previous session.

The rebound helped sterling regain the 10-DMA at 1.4169, fueled by upbeat comments from UK PM Boris Johnson who saw no reason to delay the UK's scheduled June 21 reopening nL9N2KM01Y even though caution remains necessary.

With the Fed yet to formulatepolicy normalization plans as the pandemic recovery proceeds amid an expected transitory inflation rise, the environment for sterling is relatively benign.

Fed rate stability has many forecasting a period of dollar weakness, as other developed and emerging economies recover and hint at upcoming taper of asset purchase programs and rising rates.

A robust employment rise in Friday's U.S. non-farm payrolls release could increase the likelihood of earnest Fed tapering discussions, which may lead markets to factor the process starting by year-end 2021, with rate hikes to follow in late 2022 EDz2.
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Source:
Refinitiv IFR Research/Market Commentary

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