diff --git a/UNRELEASED.md b/UNRELEASED.md
index bf3d4ad003d..cd1161fe2f1 100644
--- a/UNRELEASED.md
+++ b/UNRELEASED.md
@@ -13,6 +13,7 @@ Use [the changelog guidelines](https://git.io/polaris-changelog-guidelines) to f
 ### Bug fixes
 
 - Fixed a bug in `Banner` where loading state wasn't getting passed to `primaryAction` ([#4338](https://github.com/Shopify/polaris-react/pull/4338))
+- Fixed `Popover` not correctly positioning itself ([#4357](https://github.com/Shopify/polaris-react/pull/4357))
 - Fixed a bug `TextField` where Safari would render the incorrect text color ([#4344](https://github.com/Shopify/polaris-react/pull/4344))
 
 ### Documentation
diff --git a/src/components/PositionedOverlay/PositionedOverlay.tsx b/src/components/PositionedOverlay/PositionedOverlay.tsx
index 3491fe8bee8..a4649666c25 100644
--- a/src/components/PositionedOverlay/PositionedOverlay.tsx
+++ b/src/components/PositionedOverlay/PositionedOverlay.tsx
@@ -57,7 +57,11 @@ interface State {
   lockPosition: boolean;
 }
 
-const OBSERVER_CONFIG = {childList: true, subtree: true};
+const OBSERVER_CONFIG = {
+  childList: true,
+  subtree: true,
+  characterData: true,
+};
 
 export class PositionedOverlay extends PureComponent<
   PositionedOverlayProps,
@@ -278,6 +282,7 @@ export class PositionedOverlay extends PureComponent<
           () => {
             if (!this.overlay) return;
             this.observer.observe(this.overlay, OBSERVER_CONFIG);
+            this.observer.observe(activator, OBSERVER_CONFIG);
           },
         );
       },
diff --git a/src/components/PositionedOverlay/tests/PositionedOverlay.test.tsx b/src/components/PositionedOverlay/tests/PositionedOverlay.test.tsx
index 6adddc7dc32..1bd293a64b3 100644
--- a/src/components/PositionedOverlay/tests/PositionedOverlay.test.tsx
+++ b/src/components/PositionedOverlay/tests/PositionedOverlay.test.tsx
@@ -24,6 +24,38 @@ describe('<PositionedOverlay />', () => {
     });
   });
 
+  describe('mutation observer', () => {
+    let mutationObserverObserveSpy: jest.SpyInstance;
+
+    beforeEach(() => {
+      mutationObserverObserveSpy = jest.spyOn(
+        MutationObserver.prototype,
+        'observe',
+      );
+    });
+
+    afterEach(() => {
+      mutationObserverObserveSpy.mockRestore();
+    });
+
+    it('observers the activator', () => {
+      const activator = document.createElement('button');
+      mountWithAppProvider(
+        <PositionedOverlay
+          {...mockProps}
+          activator={activator}
+          preferredPosition="above"
+        />,
+      );
+
+      expect(mutationObserverObserveSpy).toHaveBeenCalledWith(activator, {
+        characterData: true,
+        childList: true,
+        subtree: true,
+      });
+    });
+  });
+
   describe('preferredPosition', () => {
     let calculateVerticalPositionMock: jest.SpyInstance;