GBP/USD: Most factors point to the upside for a break above 1.34, yet risks loom large


GBP/USD has been resuming its gains amid upbeat news from the vaccine front and US politics. Monday's upside move failed to break the 1.34 level, but sterling has another chance, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“AstraZeneca and the University of Oxford published promising results from their Phase 3 coronavirus vaccine trial. While the different dosage figures caused some confusion, markets are more optimistic now and await the final figures. The British-grown immunization scheme is the third out of three vaccines and emergency authorization is likely in the UK as early as next week.” 

“President-elect Joe Biden will be able to begin his transition after outgoing President Donald Trump gave the green light to the move. The authorization removes political tensions and would allow for better control of the pandemic and the economy. Janet Yellen, the highly regarded former Federal Reserve Chair, will likely be America's next Treasury Secretary. Her probable nomination has also been cheered by markets as she would support fiscal stimulus yet without endangering free trade.” 

“UK Prime Minister Boris Johnson announced the end of the nationwide lockdown in December but the localized tier system will likely be stricter than the previous one. Moreover, it is still unclear if London, one of the world's financial capitals, will be under severe restrictions.The UK's case curve is falling, yet mortalities remain elevated.” 

“Brexit negotiations remain around ‘95% done’ but the lack of a breakthrough on the most contentious issues is becoming worrisome as the clock ticks down to year-end when the transition period expires. Headlines range from hints of an imminent accord to a collapse in talks, adding to the confusion.”

“Resistance is at Monday's peak of 1.3397. The next lines to watch date back to the summer when 1.3420 and 1.3510 played a role in holding GBP/USD down. Support is at 1.3310, the former double-top, and then by 1.3265, Monday's trough.”

 

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