GBP/USD: There are reasons for a correction but Biden and UK vaccines may avoid it

GBP/USD has been falling from the highs as three dark clouds hit sterling but President Biden's economic speech and the accelerated UK vaccination campaign may boost sentiment, Yohay Elam, an Analyst at FXStreet, reports.

See – GBP/USD: The close above 1.3712 pushes the 1.3836 February 2016 low to the fore – Commerzbank

Key quotes

“Britain's hospitals have been struggling under an ever-growing flow of patients, and easing restrictions may come later and be extended. These concerns have been weighing on sterling, alongside two other developments. UK Retail Sales rose by only 0.3% in December, far worse than expected. Last and not least, GBP/USD has been on the back foot amid a souring market mood. Republicans seem reluctant to back additional spending. While Democrats have room to move forward on their own, support from the opposition would ensure a large package and a quick delivery.”

“Biden is slated to deliver a speech on the economy later on Friday. The president may either go for quick and small wins – pushing non-controversial issues in early February – or aiming for the larger package. The latter would take time. Markets would like to see more funds and the sooner, the better. The safe-haven dollar would drop when markets rise and fall if they return to gains.”

“Britain has already administered jabs to around 7.5% of the population but has yet to reach the target rate of 500,000 inoculations per day. Any acceleration would be welcome.” 

“Some resistance awaits at 1.3680, which capped the pair in early January. It is followed by 1.3720, the previous 2021 peak. Support is at 1.3620, which was a stepping stone on the way up, followed by 1.3525, a cushion seen last week.”