GBP/USD: Powell to overshadow UK GDP

GBP/USD has moved higher as UK Q1 GDP beat expectations and amid market calm. Fed Chair Powell's speech and fears of a second wave could send the dollar higher, FXStreet’s analyst Yohay Elam briefs.

Key quotes

“The UK economy shrank by ‘only’ 5.8% in March and 2% in the first quarter. GDP dropped by the worst since the financial crisis but not below that level.” 

“Chancellor of the Exchequer Rishi Sunak is set to extend the furlough scheme through October as the crisis will likely last for longer. However, this could cost the UK a ballooning deficit and he is reportedly considering tax hikes and other measures. Such measures could weigh on the economy and sterling.” 

“Dr. Anthony Fauci has warned that lifting the lockdowns too soon could cause unnecessary death and suffering. His testimony weighed on markets and boosted the safe-haven dollar.”

“Jerome Powell will speak later in the day. Speculation about setting negative rates is mounting amid such pricing by bond markets last week. His words will likely rock markets.”