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Mar 15 - 11:55 AM

GBP/USD - COMMENT-Sterling Slips As Focus Shifts To Fed Hawkish Hold Expectations

By Paul Spirgel  —  Mar 15 - 10:43 AM

Sterling fell against a broadly stronger dollar on Monday as market focus turned to the Fed and BoE meetings this week, with markets wondering how U.S. policy makers will finesse an upbeat economic message with an extended period of accommodation and rising yields.

Cable retreated from its early U.S. high by 1.3927 to new session lows below 1.3900 nL1N2LD0XH.

With theFed having signaled rates will remain steady long into the future, markets expect the U.S. central bank to build on comments by Treasury Secretary Janet Yellen of only small inflation risk with growing employment.

Recent USD strength has seen a significant reduction in euro 1099741NNET and yen long positioning into the dollar and sterling.
Broad dollar strength remains the prevailing FX theme, as long U.S. Treasury yields hover near 1-year highs following the recent approval of U.S. COVID relief and accelerating vaccine deployment.

Though GBP/USD remains well below its late-February, 2021 high by 1.4240, support remains firm by recent trend low 1.3779 and 55-DMA at 1.3773.
Barring a new uptick in COVID cases, sterling's post-Brexit and pandemic leadership position may lead to a renewed test of trend highs above 1.42.
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Source:
Refinitiv IFR Research/Market Commentary

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