The US dollar is showing pressure by the later insistence from Federal Reserve chairman Jerome Powell that rate increases aren’t on the radar, while sterling has been riding higher with re-opening optimism. Yesterday the greenback rose after the release of FOMC decision for a short time and thereafter  it has went down into two weak low. The US central bank has pledged to continue to support the economy even as the effects of the pandemic ease.

The FOMC stated in a yesterday meeting that “the economy has made progress toward these goals, and the committee will continue to assess progress in coming meetings”. It saying that rising inflation was “largely reflecting transitory factors”. Federal Reserve officials indicated they have begun discussing when to tap the brakes on their robust support for the U.S. economy amid an inflation surge, even as the delta variant of the coronavirus poses a increasing threat to growth.

The central bank kept the target range for its benchmark policy rate unchanged at zero to 0.25 per cent and adjusted language to say that it had pledged in December to continue asset purchases at a $120 billion monthly pace until “substantial further progress” had been made on employment and inflation. Consumer prices are rising at the fastest pace since 2008 as the economy reopens and Americans renew spending after a year of lockdown. At the same time, the spreading delta variant of the coronavirus has jolted investors who worry it could threaten the economic recovery.

On the other hand the speech from Joe Biden in London that – is that all G7 nations, including the UK, should not even be talking about withdrawal of support. “G7 economies have the fiscal space to speed up their recoveries to not only reach pre-Covid levels of GDP, but also to support a return to pre-pandemic growth paths,” said Secretary Yellen in a speech on Saturday.

The IMF said UK economy will grow faster than expected this year as it recovers from the Covid pandemic. In a new assessment the IMF said the outlook for many developing countries has weakened. Among the forecast revisions for this year, the largest upgrade is for the UK to 7%. The UK’s Chancellor, Rishi Sunak, welcomed what he called “the positive signs that the economy is rebounding faster than previously expected”. Experts say that the British infection numbers ticked higher on yesterday but the rolling averages are heading into lower.

GBP/USD 4 Hour Chart:

Support: 1.3857 (S1), 1.3816 (S2), 1.3789 (S3).

Resistance: 1.3925 (R1), 1.3952 (R2), 1.3993 (R3).

The FOMC review pushes the greenback into downward moment. We expect a bullish trend for GBP/USD.