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Jun 18 - 11:55 AM

GBP/USD - COMMENT-Hawkish Fed Take By Bullard Leaves Mark On Sterling Outlook

By Paul Spirgel  —  Jun 18 - 10:18 AM

GBP/USD fell on Friday, hitting a 6-week low at 1.3825 nL2N2O0143 after St.
Louis Fed President James Bullard delivered hawkish reinforcement to the U.S. central bank's message this week, which could hobble sterling's outlook, unless the BoE keeps pace at its June 24 MPC meeting nL2N2O00NA.

Thursday's break below key GBP/USD support at 1.3960, the 50% Fib of its 1.3670-1.4250 rise, and dip below the daily cloud led traders to reduce long positions built up this year on vaccine roll-out and post-Brexit optimism.

That enthusiasm for the pound had already started to suffer from emerging Brexit frictions and the delays to final stages of post-pandemic reopening.

As markets acclimate to the more hawkish Fed, GBP/USD could remain capped at recent highs above 1.4200 as it had been for much of May and early June.

Support for the pound comes in at 1.3803, its April 3 and May 3 low, followed closely by its recent trend low at April 12's 1.3670, with the 200-day moving average underpinning price at 1.3595.

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Source:
Refinitiv IFR Research/Market Commentary

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