GBP/USD has room to rise once the correction is over

GBP/USD has tumbled over 100 pips from the highs after a massive rally. Fed Chair Powell´s dovishness and the UK´s exit plan may trigger a new upward move after the correction ends, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“Bloated estimates about Britain's bounceback are behind the fall, but the picture remains positive for sterling as the vaccination campaign continues at full speed.” 

“Powell appears before Congress again on Wednesday and will likely reiterate that the Fed ‘is not thinking about thinking of raising rates’ as he once said. For the dollar, while ten-year Treasury yields hold below 1.50%, the dollar's gains will likely be limited.” 

“The Relative Strength Index on the 4-hour chart is still above 70 – indicating overbought conditions but below extreme levels seen earlier. Other indicators such as momentum and cable's trading above the 50, 100 and 200 Simple Moving Averages are pointing down.”

“Support awaits at 1.4095, a temporary cap on the way up, and then by 1.4050, a support line seen earlier this week.”

“Resistance is at 1.42, the round number, and then the new 2021 peak of 1.4240.”