Dollar Forex Market Strength Topples GBP Ahead of Key Testimony

  • Sterling Falls Despite Improving Unemployment Rate
  • Joint Congress Testimony Driving Dollar
  • Markets Slip Following Strong Start

Ahead of a big day for the forex market, major currencies have slipped against a strengthening US Dollar. This is less related to anything negative on the side of the Pound or Euro, and more connected with a move toward some caution as traders await an important joint congressional testimony from Treasury Secretary Yellen, and Federal Reserve Chair Powell later today. With most eyes on this testimony and any answers that will come from it, early trading on Wall Street has also proven cautious with the markets moving red for the most part.

Sterling at Lowest Point in Several Weeks

While other major currencies also slipped including the Euro, the main victim of the move toward US Dollar safety so far has been the GBP. The Pound has slipped toward 1.375 in a dip that marks its own lowest point in 6-weeks. There are several reasons why the Pound may have slipped more than its European counterpart on the back of USD strength.

The currency has been riding high ever since the successful Brexit departure. It has seemingly gone from strength to strength while the neighboring Euro toiled under the weight of lockdown and increasing COVID-19 cases. Besides being on a pedestal to be shot down though, the UK has recently run into some of its own coronavirus challenges. These have come in the form of their dispute with the EU over AstraZeneca with the EU threatening to block exports, threatening to derail a so-far successful British vaccine campaign.

Joint Testimony First Coming Today

The eyes of those forex trading and beyond will be fixed on congress today as both Fed. Chair Jerome Powell and Treasury Secretary Janet Yellen line out for a mandatory testimony in front of congress as set out in the CARES Act. Top of the bill for questioning is likely to be how inflation concerns can be abated, and how the recent $1.9 trillion stimulus package will be put to work.

The expectation from forex brokers and analysts alike is that Powell will maintain the Fed stance that inflation is nothing to be concerned about at present and that any rise is simply transitory and likely to stay well within the 2% target range. Yellen is likely to provide updates on the key areas where the stimulus package is being deployed.

Markets Take Cautious Step to Start Day

This week on Wall Street started very strongly for the NASDAQ in particular which helped some of the big tech names to bounce back into action, Tesla being one of the biggest beneficiaries with an almost 5% jump.

All indications are that this action will take a side step at least until news from the important congressional testimony starts to filter out. In that vein, all markets have opened unchanged or slightly down with many likely remaining on the sidelines to get a more complete picture for the period ahead.

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