GBP/USD: Bulls are in the driver's seat as sterling benefits from vaccines

GBP/USD has been licking its wounds after succumbing to dollar strength. Out of overbought territory, and with upbeat fundamentals, the cable is ready to climb, according to FXStreet’s Analyst Yohay Elam.

An improving market mood may weigh on the greenback

“Prime Minister Boris Johnson has warned his fellow Brits about chances of another wave of coronavirus on the other side of the summer. However, the UK's current state of affairs seems promising. Jabbing around half the population with one vaccine is proving immensely successful, and the next step of reopening seems all but certain.” 

“The safe-haven greenback benefited from Tuesday's sell-off in stock markets, as investors flocked into the world's reserve currency. However, the winds are changing once again, with S&P 500 futures moving up. The US economy continues growing at a rapid pace – and virus figures are turning back down after a mini-wave beforehand. That should allow stocks to rise and the dollar to resume its falls.”

“Tuesday's fall from 1.40 has pushed the Relative Strength Index (RSI) below 70 – outside overbought territory and allowing for gains.”

“Some resistance awaits at 1.3960, a level that capped GBP/USD in March. It is followed by the peak of 1.4010. Support awaits at the daily low of 1.3910, followed by 1.3850 and 1.3810.”