British Pound (GBP) Price Outlook: GBP/USD Rally May Run Out of Steam
GBP price, news and analysis:
- The rally so far this week in GBP/USD has been due entirely to the weakness of the US Dollar as the spread of the coronavirus delta variant in the US has led to doubts about whether the Federal Reserve will still taper its monetary largesse.
- Now it seems likely that the advance in GBP/USD will soon reverse and that the downward trend in place since late July will resume.
GBP/USD at risk of falling
GBP/USD has benefited so far this week from the slide in the safe-haven US Dollar caused by an increase in risk appetite as the spread of the delta variant of Covid-19 in the US has led to speculation that the Federal Reserve may delay tapering its monetary stimulus.
The Fed had been expected at the very least hint to hint at a tightening of its monetary policy at the Jackson Hole symposium that starts this Thursday but that is now in doubt even though Pfizer’s Covid-19 vaccine has received full approval from the US Food and Drug Administration – a move that should counter the vaccine’s spread and thereby have little impact on the Fed’s decision.
GBP/USD Price Chart, One Hour Timeframe (July 29 – August 24, 2021)
Source: IG (You can click on it for a larger image)
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Now it seems likely that GBP/USD will resume the downward trend that has been in place since July 29 and is still intact despite the rally that began around midday London time Friday. There is no first-tier UK data due this week so little to disturb traders focused on the Jackson Hole gathering, which will now be virtual because of the spread of the delta variant.
--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.