GBP/USD: Three dark clouds loom over cable, inhibiting any upside

FXStreet Team FXStreet

GBP/USD has bounced from the triple bottom as the UK reopens. However, Brexit issues, US inflation and vaccine scares may curb bulls' enthusiasm, Yohay Elam, an Analyst at FXStreet, reports.

Pound bulls still have three hurdles to overcome

“Brexit issues: While the EU and the UK are reportedly nearing a settlement related to commerce in Northern Ireland, tensions remain elevated in the province. Colder weather may have prompted a pause in violence, but frustrations around the Brexit accord may reignite riots on the streets of Belfast. Moreover, British exporters continue suffering from non-tariff barriers.”

“US inflation lifts its head: Producer prices shot higher in March, beyond the "base-effects" related to the bounce from pandemic-depressed costs seen last year. Jerome Powell, Chair of the Federal Reserve, noted that the US economy is at an ‘inflection point’ – on the verge of rapid growth. Will the Fed be forced to raise interest rates sooner rather than later? The greenback is gaining ground. So far, the pound has put up a fight against the greenback, but things may change.”

“Virus: The US and the UK are both vaccinating their populations at a rapid clip, but worries remain prevalent. First, cases continue rising in the US, especially in Michigan. In addition, a study published in Israel has shown that the Pfizer/BioNTech jabs are less efficient against the South African variant. If these worries persist, it could boost the safe-haven dollar.”

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FXStreet Team

FXStreet

EUR/USD holds losses near 1.1850 as US, China holidays keep trade muted

EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

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Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

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