On Friday, British Pound sharply increased in price against Dollar, quotes rose to the level of 1.3845.
Despite the strong economic data coming in from the US, investors now seem convinced that the Fed will keep interest rates near zero for a long time. Fading expectations of an earlier rate hike have limited any meaningful upside potential for the dollar, which has so far found no support from a strong rise in US Treasury yields. In addition, the continued rally in the stock markets further undermined the demand for safe assets, including the Dollar. At the same time, concerns about the side effects of the AstraZeneca coronavirus vaccine may hold back any significant upside potential for the British currency.
The pair GBP/USD is trading near the maximum value in two weeks. Demand for risky assets in the market will provide support for the pound in the short term. This week, employment market data will be released in the UK, which may also contribute to the growth of quotations. The high value of average wages over the past three months will subsequently mean an increase in consumer prices and a reduction in the likelihood of an interest rate cut by the Bank of England in the second half of the year.
Trading Signal for GBP/USD
The trading forecast assumes a corrective decline of Pound/Dollar to 1.3775.