The Pound has gained strength and accumulates a move showing its strong gains in the past few sessions.

The pound has made gains with the response to the US dollar index (DXY), which tracks the movement of the greenback against its counterpart. The index lost its ground on Wednesday and fell to multi-week lows, thus exerted pressure on the dollar and helped the pound. This move was sponsored with the help of the unchanged and widely anticipated tone of the US central bank approach on its current accommodative monetary policy with the Fed maintained status-quo on short term interest rates and a bond-buying program.

The comment from Fed Chair Jerome Powell came just before US President Joe Biden’s first speech to Congress on the unveiling of a sweeping package for families and education. Investors already reacted to this decision earlier and, thus, remained unfazed largely by the announcement.

“The risk is the Fed is very cautious and delays taking the first steps to normalising policy,” said Joseph Capurso, head of international economics at CBA. “Low interest rates amid an improving U.S. and global economy is a recipe for the dollar to continue decreasing.”

Even the outperformance of the U.S. economy had a sting in the tail for the dollar as it sucked in imports and drove the trade deficit to record highs in March.

Elsewhere, the sterling also seem to be benefited from better economic recovery prospects after the pick up in covid vaccine roll-out programme which  overcomes difficulties in the supply of the essential vaccine. Further,  the optimism around the Brexit deal, after the EU Parliament voted by a large majority to give the final approval to the Brexit deal amid confusions, complaints and a court challenge, lifted the sentiment around pound.

GBP/USD 4 Hour Chart:

Support: 1.3881 (S1), 1.3826 (S2), 1.3791 (S3).

Resistance: 1.3971 (R1), 1.4006 (R2), 1.4060 (R3).

Amidst all the catalysts favoring pound, we expect a bullish trend for GBP/USD.