- GBP / USD is prolonging Monday’s gains.
- The Fed’s dovish outlook, a drop in US bond yields undercut the dollar.
- The pound is exceeding what had left last week’s meeting of the Bank of England.
GBP / USD jumped to a three-day high during the European session to reach 1.3607, but failed to hold above 1.3600 and fell back towards 1.3580.
The pair extended Monday’s rally, rising more than 130 pips from the weekly low. This allowed the pair to move away from the five-week lows on Friday. The dominant impulse was a weak dollar.
The greenback was affected by expectations around the Fed, following last week’s meeting and the possible appointment of Lael Brainard. In the bond market this was felt with a drop in yields that weighed on the dollar.
On the side of the pound, the risk continues due to the possible activation of the United Kingdom of article 16 of the Northern Ireland Protocol, which could hurt the pound. Anyway, the currency is recovering three to the hit of last week with the decision of the Bank of England last week, not to raise interest rates.
On Tuesday the key data will be the US wholesale inflation. On Wednesday it will be the turn of the consumer price index. When it comes to exhibits, Andrew Bailey and other central bank chiefs will speak publicly on Tuesday, but they are not expected to address monetary policy.