GBP/USD Forecast: Third time's a charm? Why a new attack on 1.37 might succeed


  • GBP/USD has been torn between optimism about the UK vaccine rollout and US stimulus hopes. 
  • Tentative signs of Britain turning a corner on the second wave may boost sterling. 
  • Thursday's four-hour chart is painting a bullish picture.

Is the severe British lockdown bearing fruits? That could serve as a tiebreaker for GBP/USD, which has tackled 1.37 twice and may pierce higher.

Coronavirus cases have been dropping from the peak, providing hope that deaths – which have hit record highs – will decline as well. The decline in infections would also alleviate pressure on overstrained hospitals and calls by the opposition for even tighter restrictions. 

Source: FT

So far, cable has been pushed and pulled by two opposing forces. Starting from positive UK developments, the vaccination campaign continues at full speed, hitting 4.52% of the population – the highest in the Western world. Moreover, Britain begins administering jabs in pharmacies on Thursday, potentially accelerating the pace. 

Investors are looking beyond the current misery and to the future. The faster a country inoculates its population, the quicker the economic recovery. 

Focusing beyond the current hardship is also the name of the game in the US. According to reports, President-elect Joe Biden is set to present a large $2 trillion relief package – more than expected. The news has been pushing investors to stocks and away from bonds – resulting in higher yields. In turn, elevated returns on American debt boost the greenback.

The ball is now in the Federal Reserve's court. Will it buy additional bonds, pushing yields and the dollar lower? Jerome Powell, Chairman of the Federal Reserve, speaks later in the day and he may opt for taking the other direction – gradually tapering down the bank's support, as the economy needs less of it. His colleagues at the Fed have been mostly rejecting the option of purchasing fewer bonds – but the focus on optimistic forecasts is supporting the dollar. 

Back to the grim present, investors will watch updated UK covid statistics and also US jobless claims, which are set to remain at the highs around 800,000.

See US Initial Jobless Claims Preview: Will filings indicate more layoffs?

All in all, the GBP/USD has room to rise despite fresh dollar strength. 

GBP/USD Technical Analysis

Pound/dollar continues trading in a broad upward channel. Zooming in, momentum on the four-hour chart remains to the upside and the currency pair trades above the 50, 100 and 200 Simple Moving Averages – all bullish signs. Moreover, the slide earlier in the week pushed the Relative Strength Index away from 70, further away from overbought conditions. 

Soft resistance awaits at 1.3670, which was a swing high last week. Critical resistance is at 1.3705 – the multi-year peak attacked twice in 2021. Further above, 1.3730 and 1.3830 await cable. 

Cable has support at 1.3615, the daily low. It is followed by 1.3545, a cushion from last week, followed by 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.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 

EUR/USD News

GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 

GBP/USD News

Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News

Forex Majors

Cryptocurrencies

Signatures