GBP/USD keeps with the break below the 12 February low @ 1.3776
The pound has been one of the standout performers this year but even the currency itself cannot escape the latest episode of dollar strength in the market.
The BOE not offering much hints of being more hawkish may see some bullish bets pared but as we have seen elsewhere in the major currencies space, this is shaping up to be more of a dollar and yen story as risk averse flows dominate in FX.
For GBP/USD, the pair broke below a key trendline support yesterday and also took out support from the 12 February low @ 1.3776. That opens up a bit of a slippery slope towards the 100-day moving average (red line) next @ 1.3619 currently.
Adding to that will be some support from the 26 January low @ 1.3610 and then the 4 February low @ 1.3567 as well as another trendline support seen @ 1.3565 for now.
Looking further out, the pound vs dollar narrative will hinge a lot on which central bank turns more hawkish first as both economies look set to bounce back strongly in 2H 2021 considering that the vaccine rollout is progressing well.
For now, there is some consensus still that the UK will be able to wean off these support measures and the BOE can look to taper first.
That still sees some view that GBP/USD may pull higher later on in the year but we’ll have to reassess developments depending on how the vaccine rollout and central bank sentiment plays out in the months ahead.