GBP/USD has been on the back foot, struggling to hold onto 1.37. Its weakness is exposed as the pound is poorly positioned ahead of an expected dovish speech by Fed Chair Powell, FXStreet’s Analyst Yohay Elam briefs.
See – GBP/USD: The 1.40 level is out of sight – Rabobank
Pound technicals and fundamentals point lower
“There are several reasons for sterling's suffering. UK COVID-19 cases have extended their increase, topping 38,000 in Thursday's report. Another issue is Brexit-related – shortages in some supermarkets due to the inability of companies to find lorry drivers and also butchers. The third factor comes from the terror attacks in Afghanistan. The dollar is benefiting from safe-haven flows – and these are more pronounced against the pound.”
“To taper or not to taper? Fed Chair Powell will probably opt to delay any announcement. He will likely be able to hold back the vocal hawks for a bit longer. Ahead of his speech, the US releases the Core PCE inflation figure which is set to show a modest uptick from 3.5% to 3.6% YoY.”
“GBP/USD has been unable to reconquer the 50 Simple Moving Average on the four-hour chart, a development that exacerbates downside momentum and the fact that it earlier failed to top the critical 1.3785 resistance line.”
“Support awaits at the daily low of 1.3680, followed by 1.3635 and then by 1.36, August's trough.”
“Resistance is at 1.3750, which capped a recovery attempt early in the week, and then by the almighty 1.3785 line.”