fxstreet.com 23 Feb, 2021 08:45 am

Sterling well-positioned to pull up with Powell after Boris' boost

Sterling well-positioned to pull up with Powell after Boris' boost
Slow, but irreversible – that has been Prime Minister Boris Johnson's message when presenting his lengthy reopening plan, and the GBP/USD may echo his

While investors prefer a quicker return to normality – especially as COVID-19 statistics have been falling sharply – the government's cautious four-month exit scheme has been well-received by markets, which seem convinced that the current lockdown is the last.On the other hand, Powell can afford to cheer the current comeback in yields – seen as a healthy sign of the return to normality – in fear of a market meltdown.That would lower yields but could also trigger fears of inflation.Powell, then a Governor on the Fed's board, has probably learned the lesson and will likely err on the side of keeping markets calm – even at the risk of rising inflation fears.

However, a look at the recent past shows that the RSI can hold onto high ground for long periods.Moreover, the program receives broad support from the public, the opposition, the medical community – and also from the Treasury, which is set to extend its furlough scheme.

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