On both sides of the water, the GBP/USD has been pulled between increasing inflation and central bank repudiation. Sterling may suffer as the Bank of England (BoE) looks the other way, according to FXStreet Analyst Yohay Elam.” The US economy is still ‘a ways off,’ according to Federal Reserve Chair Jerome Powell, to the point where the bank’s bond-buying program should be tapered. Furthermore, Powell argued that higher prices are a result of the reopening, and thus temporary, even if he conceded that they could last a few months.”
“In the United Kingdom, the situation is similar, albeit with lower inflation. In June, consumers had to spend 2.5 percent more for the same basket of products as they did last year. Nonetheless, Bank of England Governor Andrew Bailey stated that such temporary inflation will not drive him to hike rates. The sterling’s sails are deflated as a result of this.”
“Another aspect that could drive up the price is the rapid distribution of the Delta covid version, which coincides with the ‘big bang’ reopening on July 19. Even though British citizens are wary of persons wearing masks on public transportation, the government appears to be eager to remove practically all restrictions.”
“Delta is also spreading in the United States, which might prompt the Fed to take another step back – although if the US slows down enough, it could help the safe-haven currency.”
“The weekly low of 1.38 is a good place to look for support. The next two numbers are 1.3750 and 1.3730. The daily high of 1.3865 is resistance, followed by 1.3905, a stubborn cape from last week.”/n
