GBP/USD: There are reasons for a correction but Biden and UK vaccines may avoid it
|GBP/USD has been falling from the highs as three dark clouds hit sterling but President Biden's economic speech and the accelerated UK vaccination campaign may boost sentiment, Yohay Elam, an Analyst at FXStreet, reports.
See – GBP/USD: The close above 1.3712 pushes the 1.3836 February 2016 low to the fore – Commerzbank
Key quotes
“Britain's hospitals have been struggling under an ever-growing flow of patients, and easing restrictions may come later and be extended. These concerns have been weighing on sterling, alongside two other developments. UK Retail Sales rose by only 0.3% in December, far worse than expected. Last and not least, GBP/USD has been on the back foot amid a souring market mood. Republicans seem reluctant to back additional spending. While Democrats have room to move forward on their own, support from the opposition would ensure a large package and a quick delivery.”
“Biden is slated to deliver a speech on the economy later on Friday. The president may either go for quick and small wins – pushing non-controversial issues in early February – or aiming for the larger package. The latter would take time. Markets would like to see more funds and the sooner, the better. The safe-haven dollar would drop when markets rise and fall if they return to gains.”
“Britain has already administered jabs to around 7.5% of the population but has yet to reach the target rate of 500,000 inoculations per day. Any acceleration would be welcome.”
“Some resistance awaits at 1.3680, which capped the pair in early January. It is followed by 1.3720, the previous 2021 peak. Support is at 1.3620, which was a stepping stone on the way up, followed by 1.3525, a cushion seen last week.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.