• GBP/USD has been on the back foot amid concerns about US stimulus.
  • Vaccine developments and additional stimulus headlines from Washington are eyed.
  • Tuesday's four-hour chart is showing bears are gaining ground.

Coronavirus crisis? Not in Britain's labor market, which has shown resilience once again and may help sterling recover – at least while US stimulus talks continue.

The UK's Unemployment Rate has edged up to 5% in November, below 5.1% expected and a low level also in absolute terms. The bigger surprise came from Average Earnings, which accelerated to an annual increase of 3.6% both when including and excluding bonuses. The more recent Claimant Count Change rose by 7,000, also exceeding estimates.

Britain's successful furlough scheme is the main reason employment remains robust, and it will likely be extended as much as necessary. Can government efforts in the vaccination rollout also boost sterling? Nearly 10% of the population has already received at least one shot, and the pace is nearing the 500,000/day target. 

Source: OurWorldInData

Recent data from Israel has shown that among those who received two jabs, nobody has been hospitalized. The UK's policy to delay the second inoculation has come under scrutiny, but by reaching more people, it may offer at least some protection. 

On the other side of the pond, the safe-haven dollar is gaining ground amid concerns that President Joe Biden's stimulus plan is delayed or watered down. The administration is ready to negotiate with Republicans and markets are worried that momentum is lost. 

Will Democrats call time after several days of attempts and go it alone? Markets probably expect the White House to climb down from the $1.9 trillion stimulus plan but not to levels above $1 trillion. Headlines from Washington are set to rock the greenback later in the day.

The Conference Board's Consumer Confidence figure for January is also of interest. 

See Conference Board Consumer Confidence January Preview: Mirror to the labor market

All in all, while GBP/USD is on the back foot, there is room for recovery. 

GBP/USD Technical Analysis

Pound/dollar is has dropped below the 50 Simple Moving Average on the four-hour chart but has bounced off the 100 SMA. Momentum has flipped to the downside, but only just – and the currency pair is still holding about the uptrend support line that has been accompanying it since mid-December. 

All in all, bulls are not giving up. 

Some resistance awaits at 1.3670, which capped GBP/USD early in the year. The recent high of 1.3725 and the 2021 peak of 1.3740 are next. 

Support awaits at the daily low of 1.3630, followed only by 1.3520, which was a stepping stone on the way up. The next level to watch is 1.3450. 

GBP/USD Price Forecast 2021: Cable braces for calendar comeback amid three exits

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD rises toward 0.9700 following earlier slump

EUR/USD rises toward 0.9700 following earlier slump

EUR/USD has managed to erase its daily losses and turned flat on the day slightly below 0.9700 in the European morning. As investors await IFO surveys from Germany and mid-tier data releases from the US, the cautious market mood limit's the pair's upside.


GBP/USD rebounds from all-time lows, eyes on BoE

GBP/USD rebounds from all-time lows, eyes on BoE

GBP/USD has recovered above 1.0700 from the all-time low it touched below 1.0400 earlier in the day. GBP bears move to sidelines amid market speculations that the Bank of England could consider an emergency rate hike to stop the currency's depreciation.


Gold gains traction, trades above $1,640 Premium

Gold gains traction, trades above $1,640

After having dropped to its weakest level in over two years below $1,630 during the Asian trading hours, gold staged a rebound and advanced beyond $1,640. The benchmark 10-year US T-bond yield is up 2% on the day, not allowing XAU/USD to gather further bullish momentum.

Gold News

Cardano price could trap impatient investors before triggering an explosive move to $0.505

Cardano price could trap impatient investors before triggering an explosive move to $0.505

Cardano price shows a consolidation below a stable support level and has yet to reveal a directional bias. The ongoing range tightening will likely resolve as the US markets head to a fresh start this week.

Read more

Week Ahead: Euro eyes Italian elections and flash CPI, dollar may take a backseat

Week Ahead: Euro eyes Italian elections and flash CPI, dollar may take a backseat

With the Fed meeting out of the way, a quieter week is on the horizon, barring of course any flare up of tensions between Russia and Ukraine. Either way, the spotlight will probably fall on the euro as far-right parties are expected to gain ground in Italy’s parliamentary election on Sunday.

Read more