On Wednesday, greenback suffered a loss against the pound supported by the Bank of England governor talking down the prospect of negative rates in the United Kingdom.

The key notes of the governor speech were “Negative rates are a controversial issue., There are a lot of issues with negative rates., No country has used negative rates in ‘retail’ end of the financial market., There are good reasons to think we’re in a world of low rates for a long period of time. Outlook for interest rates hinges on productivity growth.”

The dollar index fell by 0.41% on Tuesday, but there is a rise in the US bond yields on markets and economy and awaiting additional stimulus measures amid political turmoil in Washington.

President-elect Joe Biden is about to reveal details of his economic plan on Thursday. According to a CNBC report citing UBS Global Wealth Management, even a $500 billion fiscal package consisting of additional stimulus checks, extended unemployment benefits, and funding for healthcare and vaccine disbursement could boost economic growth in 2021.

There may be selling pressure if the expectation is not meet. In that case, the dollar, which has been treated as funding currency since the March crash.

Political tensions in Washington also poses a risk. Vice President Mike Pence said Tuesday in a letter to House Speaker Nancy Pelosi that he will not remove President Donald Trump from office. Pence’s comments came as the Democratic-held House planned to vote on a resolution calling on him and the Cabinet to invoke the 25th Amendment.

GBP/USD 4 Hour Chart:

Support: 1.3552 (S1), 1.3443 (S2), 1.3384 (S3).

Resistance: 1.3720 (R1), 1.3779 (R2), 1.3888 (R3).

Amidst all the catalysts still posing some pressure on the greenback, we expect a short term bullish trend for GBP/USD.