GBP/USD Finds Stiff Resistance at 1.40 Ahead of the FOMC and BOE Later in the Week

Summary:

GBP/USD unable to move above 1.40, got hit by shrinking trade numbers with the European Union. The Bank of England is in focus this week.

The GBP/USD pair is unable for the moment to move back above the 1.40 round number. For the second time in a row, the market participants sold it in an attempt to break higher, and now heads to the next level of support.

A number of factors are moving cable this week. First, the success of the UK’s vaccination campaign is a net positive for the pound – the main reason behind the rally seen in the last several months. Second, the weakness in the dollar and the fears of inflation due to the massive monetary and fiscal stimulus in America have led to a steady decline in the greenback.

Third, new data suggests that Brexit starts to take its toll on Britain. Exports and imports to and from the single market have declined dramatically in the first months after Brexit, likely behind the recent move lower in the GBP/USD pair.

The week ahead is very important for cable, as both central banks are due to release their monetary policy decision – first the Fed and one day later the Bank of England.