GBP/USD: Sterling fears the virus, Fed pushes the dollar higher and data may compound it

GBP/USD remains below 1.42. Concerns that the UK reopening could be delayed and Fed's taper hints may send sterling down, according to FXStreet’s Analyst Yohay Elam.

Potentially upbeat US data support the dollar

“UK Prime Minister Boris Johnson has denied there is a need to delay the last stage of the UK's reopening but said that more information is needed. The usually confident PM has seemed more cautious after daily COVID-19 cases topped 4,000 and continue their uptrend.”

“While Britain's vaccination campaign is well-advanced – and continues at full speed – the new increase in infections is becoming more worrying. The Delta variant, originally identified in India, remains of concern to the UK and its neighbors, which are wary of receiving people arriving from Britain. The reopening – dubbed ‘Freedom Day’ is due on June 21.” 

“The dollar is gaining ground after the Federal Reserve sent hints it would taper its bond-buying scheme. Philadelphia Fed President Patrick Harker said that he favors "thinking about thinking" of reducing purchases, and his words came as the bank scrapped a minuscule corporate bond-buying scheme. Every march begins with baby steps. 

“The Fed is responding to several upbeat inflation figures and Thursday's ISM Services Purchasing Managers' Index is the next to reflect on price pressures. The parallel release for the manufacturing sector painted a picture of shortages due an unbalanced supply/demand picture.”

“The ISM Services PMI also serves as a hint toward Friday's Nonfarm Payrolls figures, and so does ADP's labor market report, which is set to show an increase of over 600,000 private-sector positions.”