GBP/USD keeps pushing higher and approaches 1.3400 area
|- GBP/USD’ appreciates for the fourth consecutive day and approaches 1.3400.
- The pound shrugs off the historical budget deficit and the grim economic outlook.
- GBP/USD still aiming to 1.3400 and beyond – UOB.
The sterling remains trading on a strong note and has appreciated for the fourth consecutive day on Wednesday, extending its rebound from last week’s lows at 1.3100 to session highs a handful of pips below 1.3400.
The pound has been unfazed by the record UK borrowing plan, nor by the bleak economic outlook depicted by the finance minister Rishi Sunak earlier on Wednesday and has maintained its positive trend against the US dollar to test 12-week highs at 1.3395.
The finance minister has announced a plan to borrow £400 B to offset the devastating economic impact of the COVID-19 pandemic. This will be the highest budget deficit in peacetime. Beyond that, Sunak revealed that UK economy will contract at an 11.3% pace in 2020, the largest economic decline in 300 years, to recoup only half of that loss in 2021.
Cable remains underpinned by hopes that a COVID-19 vaccine might be available early next year and investors’ confidence on a Brexit deal before the end of the transition period on December 31.
GBP/USD targeting 13400 and beyond – UOB
From a technical point of view, the FX Analysis team at UOB sees the pair aiming higher, while above 1.3200: “The underlying tone has firmed somewhat and we see a chance for GBP to edge upwards to 1.3400. At this stage, the prospect for a sustained advance above this level is not high (next resistance is at 1.3440). Support is at 1.3335 followed by 1.3300.”
Technical levels to watch
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