- GBP/USD has been under pressure after BOE Governor Bailey committed to further bond buys.
- Cable's weakness stands out as US retail sales missed estimates.
- Tuesday's four-hour chart is showing that bears are in control.
Walking on a tight rope between cheering a recovering economy and not scaring money with rate hikes – that if the job of the Federal Reserve. However, Bank of England Governor Andrew Bailey seemed to have jumped the gun, preempting the Fed and pushing the pound lower.
Despite Britain's successful vaccination campaign, Bailey said that the bank is committed to buying bonds at an elevated pace and seemed somewhat cautious about the recovery. Sterling is suffering.
Another setback for the pound comes from the decision by several EU countries to suspend the rollout of AstraZeneca's vaccines – widely used in the UK. While Britain has yet to report issues with the jabs, the scare from across the Channel is somewhat hurting the pound.
GBP/USD has been able to recover thanks to a weaker dollar. Yields on ten-year Treasuries have dropped below 1.60% as the market mood remains upbeat ahead of Wednesday's Fed decision. Some expect the world's most powerful central bank to hint at an earlier rate hike – following markets' guidance. If that happens, returns on US debt and the greenback could surge.
Jerome Powell, Chair of the Federal Reserve, will have a hard time pledging low rates and enhanced bond-buying despite rosy expectations.
US retail sales figures may help the Fed lower expectations. Americans lowered their expenditure by 3% in February, worse than expected. However, it came on top of an upward revision for January and is blamed on the "deep freeze" in the southern US.
GBP/USD Technical Analysis
Pound/dollar is trading just below the 50, 100, and 200 Simple Moving Averages on the four-hour chart while momentum is to the downside. Bears have the upper hand.
Some resistance awaits at around 1.3890, which is where the 50 and 200 SMAs converge. It is followed by 1.3950, which capped cable last week and finally by 1.4010, the mid-March peak.
Support awaits at the daily low of 1.3805, followed by 1.3775, a low point in early March. Further down, 1.3690 is the next level to watch.
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