Sterling is trading higher, but with so many variable factors in play, identifying GBP/USD range parameters may be more profitable than hoping for a trending move.
The pound's strength in 2021 is based on the UK's fast COVID-19 vaccine rollout, which was undermined on Wednesday by supply issues nL8N2LF5MX.
Should the situation escalate, sterling will suffer.
Trust between the UK and European Union has soured due to the UK's failure to implement the Brexit agreement on Northern Ireland nL8N2LD4H4, and the pound will be sensitive to how the relationship plays out.
The Bank of England is not expected to make any changes to policy on Thursday, but the tone of the statement will be key nL8N2LF580nL8N2LD4PO.
Federal Reserve Chairman Jerome Powell's dovish rhetoric on the outlook for U.S. rates Wednesday - expecting a vigorous economic rebound but without underlying inflation or wage pressures - prompted a knee-jerk risk rally, taking the safe-haven dollar lower nL1N2LF2JI.
Yet many analysts question the Fed's response to potential inflationary pressures. Only time will tell who is right but short term, economic data should have a bigger impact, leading to choppy markets, with ranges rather than trends to dominate for the USD.
The GBP/USD range is defined by 1.4010, 50% of the February-March fall that capped the pair last Friday, and the 1.3801 lower 21-day Bollinger band and 1.3779 March low.
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