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May 27 - 11:55 AM

GBP/USD - COMMENT-Sterling Bulls Cautiously Eye 2021 Highs After Hawkish Vlieghe Talk

By Paul Spirgel  —  May 27 - 10:06 AM

GBP/USD surged higher on Thursday following hawkish BoE comments, allowing bulls to consider another run at this year's peak but resistance remained firm ahead of 1.42 and could hinder the rise at least until after the long U.S. holiday weekend.

Policymaker Gertjan Vlieghe made the most explicit reference yet to when the BoE might begin reducing pandemic-related stimulus, even though he expected it to happen well into next year nL5N2NE40N.

The pound rallied from 1.4122 to 1.4184, regaining the 10-day moving average at 1.4149.

With the Fed nW1N2FT04C and ECB nL2N2NE0ZSremaining hesitant, the pound could resume its climb higher versus other major currencies should the BoE continue hinting at removingaccommodation.

Wednesday's close below the 10-DMA had pushed GBP/USD to a 9-session low ahead of May 17's 1.4078 low, and the 21-day moving average at 1.4057, which should act as support as the current UK rate drama plays out.

Sterling is likely to find resistance at Thursday's high 1.4184, with gains above 1.42, by the 2021 peak at 1.4240, likely capped ahead of the long U.S. holiday weekend.

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Source:
Refinitiv IFR Research/Market Commentary

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