GBP/USD is trading above 1.38 as investors await Britain's reopening on Monday. Selling opportunity? Risk-off mood could send sterling back down, according to FXStreet’s Analyst Yohay Elam.
There is room for cable to climb back down
“The Delta variant's spread has resulted in over 48,000 confirmed cases in the UK on Thursday, days before the grand "Freedom Day" reopening on July 19. Hospitalizations and deaths are also on the rise, adding to concerns of an economic slowdown resulting from quarantines. Under such conditions, it is hard to justify further gains for GBP/USD.”
“A slowdown might cause even hawkish members of the Bank of England to reconsider their stances. Michael Saunders was the latest BoE official to suggest the bank should end its bond-buying scheme, sending sterling temporarily higher on Thursday. Any dovish comments could weigh on the pound.”
“Federal Reserve Chair Jerome Powell said inflation is "uncomfortably high" but added that the situation of reopening the economy is "unique." Clouds of uncertainty are dollar-positive.”
“Investors are eyeing two significant releases – Retail Sales and Consumer Sentiment from the University of Michigan. In the preliminary consumer confidence figures for July, markets will likely focus on inflation expectations – the Fed is watching these surveys as well. Any sign that higher prices are anchored into people's mindsets could boost the dollar.”