GBP/USD holds comfortably above mid-1.4100s ahead of US data
- GBP/USD caught some aggressive bids following some hawkish comments from BoE’s Vlieghe.
- The gradual easing of restrictions in the UK underpinned the sterling and remained supportive.
- Investors now look forward to the US macro releases for some meaningful trading opportunities.
The GBP/USD pair rallied around 90-95 pips during the mid-European session and shot to fresh daily tops, around the 1.4185 region in the last hour.
Having shown some resilience below the 1.4100 mark, the pair witnessed a dramatic intraday turnaround on Thursday and was supported by a combination of factors. The US dollar struggled to capitalize on the previous day's recovery move from multi-month lows, instead met with some fresh supply amid dovish Fed expectations. This, in turn, acted as a tailwind for the GBP/USD pair.
Meanwhile, the latest leg of a sudden spike over the past hour or so followed some hawkish comments from the Bank of England policymaker, Gertjan Vlieghe. Speaking at an online event, Vlieghe said that an early rate hike is possible if there is a smooth transition from furlough but added that tightening policy too early would be a much costlier mistake than tightening too late.
This comes on the back of an optimistic outlook for the UK economic recovery, bolstered by the gradual easing of COVID-19 lockdown measures. In the latest developments, the UK Prime Minister Boris Johnson said that We are seeing an increase in cases of Indian variant, though there is nothing in the data currently to delay the full reopening of the economy on June 21.
It will now be interesting to see if bulls are able to capitalize on the momentum or the GBP/USD pair continues with its struggle to find acceptance above the 1.4200 mark. Market participants now look forward to the US economic docket – featuring the release of the Prelim Q1 GDP, the usual Initial Weekly Jobless Claims, Durable Goods Orders and Pending Home Sales.
Technical levels to watch