GBP/USD: Sterling is in Powell's hands to grind higher

GBP/USD has been resisting yield-driven dollar strength ahead of Fed Chair Powell's speech as the well-received UK budget and Britain's vaccination campaign continue supporting sterling. The cable may propel higher if Powell gives green light to intervene, FXStreet’s Analyst Yohay Elam briefs.

See – GBP/USD: Economic recovery as vaccination continues supports cable's momentum – CIBC

Key quotes

“While Britain's new budget consists of a sharp corporate tax hike in 2023 – from 19% to 25% – upbeat economic forecasts, extending the furlough scheme and other goodies seem to set the economy on a positive footing.” 

“The pound continues benefiting from the UK's rapid rollout of vaccines, which are hovering near one-third of the population – the world leader among large countries.”

“President Joe Biden continued pushing his covid relief program by agreeing on a compromise with moderate Democrats. Higher certainty of government spending is adverse for bonds and positive for the dollar.”

“Federal Reserve Chair Jerome Powell will make his last public appearance before the bank enters its pre-rate decision ‘blackout period.’ So far, only Fed Governor Lael Brainard said that the move in bonds ‘caught her eye.’ Powell may reiterate his previous calm message, echo Brainarad's subtle warning, or pledge to push yields lower – thus triggering a downfall for the dollar.”