GBP/USD to pierce 1.37 on the third attempt

The GBP/USD pair 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. Thus, a new attack on 1.37 might succeed, Yohay Elam, an Analyst at FXStreet, reports.

See: GBP/USD to reach 1.40 as too dovish rates pricing tilt risk to the upside – Credit Suisse

Key quotes

“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.” 

“The UK vaccination campaign continues at full speed, hitting 4.52% of the population – the highest in the Western world. Investors are looking beyond the current misery and to the future. The faster a country inoculates its population, the quicker the economic recovery.” 

“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.” 

“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.”