GBP/USD: Combination of Hogan's departure and dovish Powell to boost sterling

GBP/USD has been rising amid dollar weakness ahead of a critical speech by Fed Chair Powell while the resignation of the EU's Phil Hogan may soften Europe's approach to Brexit, FXStreet’s analyst Yohay Elam reports.

Key quotes

“Michel Barnier, the gruntled chief EU Negotiator is still in charge, but he lost a close ally – Phil Hogan. Hogan is out – following his violation of quarantine rules in his native Ireland. The European Commission may struggle to find a replacement as formidable – and knowledgeable of the sensitive issues on the Isle of Ireland – like the outgoing official.  Uncertainty about EU-UK relations hamstrung sterling and bulls may find some relief, allowing GBP/USD to rise amid dollar weakness.” 

“Jerome Powell, Chairman of the Federal Reserve, will deliver a highly-anticipated speech in the virtual Jackson Hole Symposium. While inflation is far from being a concern and rates are set to remain around zero through 2022, the long-term shift may weigh on the dollar. Powell's projected policy statement is not fully priced by markets and confirming the shift could trigger a fall in the dollar and a rise in cable.”

“Coronavirus headlines are mostly positive on both sides of the pond, with cases declining in the US and seemingly under control in Britain. Efforts to develop a vaccine are in full force and fresh headlines regarding medical developments could boost sentiment and depress the safe-haven dollar.”