The GBP/USD has gained following last night’s dovish comments from the US Federal Reserve.

Jerome Powell, Chair of the Federal Reserve, announced that interest rates will not be raised until "substantial further progress" has been made with the US economy. He admitted the economy has "a long way to go" but that the bank will continue to look through temporary increases of over 2% in inflation, as he expects this to be transitory.

Powell also stressed the bank is not about to taper down its bond buys anytime soon, noting that employment was still off-target and it would take time to reach its goals. These comments saw a loss of momentum for the greenback surrounding recent positive news around US economic growth, with investor optimism dropping following expectations that stimulus measures in the US would begin to unwind.

Mounting pressure faced by Boris Johnson's Government is expected to be weighing on sterling, which has seen a slight slowdown in the rapid gains we saw earlier in 2021. Allegations regarding Conservative donor funding of No. 10 renovations alongside comments of 'bodies piling high' have dogged Boris Johnson in recent days, as has further pressure around Brexit and the Northern Ireland protocol which has led to the resignation of DUP Leader Arlene Foster. Analysts have also warned that the UK's strong vaccination rollout is expected to have already been priced into the pound which could weaken sterling further. This news, plus a stronger vaccine rollout programme in Europe, has likely led to the gains made by the Euro against both GBP and USD this week, with a growth in market confidence that further momentum will follow.

As a result, the GBP/USD pushed up a cent overnight which took it to a 9-day high. The EUR/USD also climbed nearly a cent higher and has continued its solid ascent this month. After a heavy drop in March, the EUR/USD has clawed back nearly 4.5 cents this month due to a combination of a stronger Euro and reignited dollar weakness. The GBP/EUR is rather flat and trading towards the lower end of the recent range.

Sterling continues to be caught in familiar ranges against both the Euro and USD with traders seemingly willing to continue to see how things pan out before taking any fresh new direction.