GBP/USD has been under pressure as China grapples with power outages. In the view of FXStreet’s Analyst Yohay Elam, the dual energy crisis is set to fuel further falls.
See – GBP/USD: There is some room for sterling outperformance over the near-term – HSBC
Worries about energy are set to keep the pressure on GBP/USD
“UK Prime Minister Boris Johnson has instructed the army to prepare for delivering gasoline to petrol stations as a shortage of lorry drivers has already caused dry ups in several places. Brexit resulted in fewer EU nationals delivering goods on Britain's roads and temporarily reversing policies should help alleviate pressures. In the meantime, sterling suffers.”
“The bigger crisis for the world comes from China. Growing global demand and a shortage in coal resulted in power outages in the highly industrialized northeast. Factories may fail to deliver goods on time and stall the global recovery from the pandemic. That boosts the safe-haven dollar.”
“The greenback is benefiting from rising US yields. Returns on 10-year Treasury yields jumped above 1.50% on Monday, making the dollar more attractive. The move began after the Federal Reserve signaled it would taper bond buys last week.”