The British pound volatility has been high this week as the market deals with the Bank of England, US fed Powell and President-elect Joe Biden “American Rescue Plan”.
Sterling surged to its highest intraday level since May 2018 at 1.3709 before paring off those gains.
The pound advanced after the greenback slipped as Fed Powell ruled out an immediate rate hike.
U.S. Federal Reserve Chairman Jerome Powell struck a dovish tone after affirming his commitment to keeping interest rates low for the foreseeable future even as he expressed hope for a strong economic recovery.
Earlier, this week, the Bank of England Governor Andrew Bailey comments sounded cautions regarding negative interest rates.
On Tuesday, Bailey said there were “lots of issues” with cutting interest rates below zero, and such a move could hurt banks.
Meanwhile, in the U.K., the spread of coronavirus remains a concern. U.K. Prime Minister Boris Johnson suggested it could add more restrictions if necessary.
On Friday, economic data to be released includes trade and industrial production in the U.K. and retail sales and producer inflation in the U.S.
With the MACD indicator now mixed, the RSI is displaying a firmer bullish signal.
With the outlook neutral, a decisive break of 1.3600-15 should open the way to the grand challenge of 1.3500-20, reassess from there.
With 1.3745-65 intact should limit the upside.