GBP/USD Forecast: Brexit may provide another leg higher after boosts from Bailey and Biden

Just on time for the UK lockdown, the Bank of England has arrived to support the economy and pound bulls are cheering. 

The "Old Lady" has announced it will expand its bond-buying scheme by £150 billion to £895 billion, exceeding estimates of a more modest £100 boost. Moreover, the BOE refrained from setting negative interest rates, prompting investors to price that adverse development out.

See BOE Analysis: Bailey gives pound bulls three gifts, what to watch for next

On the other side of the pond, Democratic candidate Joe Biden is nearing the presidency after winning Michigan and Wisconsin. To become the 46th President of the United States, the former Vice-President needs to win two out of three states that will likely be declared on Thursday – Arizona, Nevada, and Georgia. Otherwise, it goes down to the wire in Pennsylvania. 

Incumbent President Donald Trump has claimed irregularities and is trying to stop the vote count in the eastern states where he is leading while urging the process to continue in western states where he is trailing behind. Investors seem to shrug off these efforts. 

Markets seem to cheer the falling chances of a contested election as well as fresh stimulus hopes. While Republicans may limit Democratic desires to raise taxes and impose new regulations, Majority Leader Mitch McConnell seems open to state aid – a thorny topic in talks about a new relief deal. 

See Markets cheer prospects of a delayed Biden victory, not a contested election

The safe-haven dollar is falling in response to US politics. Apart from waiting for further election developments, the Federal Reserve's rate decision is on the docket. While the bank is unlikely to change its policy, comments on the economy are of high interest. Daily coronavirus cases have topped 100,000 and that may weigh on the economy. 

Covid cases have begun stabilizing in the UK, providing hope that the new shuttering is not extended beyond early December. However, mortalities are on the rise in Britain. 

It seems that the only brake on GBP/USD comes from Brexit talks. After several days of reporting progress, negotiators hit a snag on Wednesday, sending sterling lower. The see-saw is set to continue, and any upbeat headline could boost sterling. 

Al in all, cable has reasons to rise. 

GBP/USD Technical Analysis

Pound/dollar has jumped over the 50, 100, and 200 Simple Moving Averages on the four-hour chart and enjoys upside momentum. As long as the Relative Strength Index remains below 70, the currency pair is not overbought and could continue advancing. 

Resistance awaits at the daily high of 1.3050, followed by 1.3080, which was a high point last week. The next levels to watch are 1.3150 and 1.3180.

Support is at 1.3020, a high points last week, followed by 1.2985, 1.2920, and 1.2855. 

See: Markets are cheering, but what exactly? Some answers and what's next