FXStreet reports that GBP/USD has today moved in the direction of its February high in the 1.4237 region and Jane Foley, Senior FX Strategist at Rabobank, notes that the broad-based weakness of the USD is largely responsible for the move in cable. In addition, expectations surrounding the reopening of the economies will also have an impact on how the pound can perform vs. USD. 

“After a generally strong set of data for Mar/April, the market is expecting the forthcoming round to extend the picture of economic recovery. A key question for GBP is how much of this good news is already in the price. The vaccine trade already lifted the pound significantly in Q1 suggesting that investors may need fresh incentives to persuade them to build fresh long positions.”

“There is speculation in the market that the Fed’s Jackson Hole symposium could provide a backdrop for policymakers to dip their toe into the topic of tapering. This, however, will depend on the path of inflation data and, since it is not scheduled until August, it is likely that the market is coming to terms with the likelihood that USD weakness could extend further in the coming weeks. While this could leave cable well supported near-term, we see scope for another move below 1.40 later in the year.”