- The BoE’s neutral stance, vaccine optimism pushed GBP/USD to fresh multi-year tops on Monday.
- The risk-on mood undermined the safe-haven USD and remained supportive of the positive move.
- Slightly overbought conditions led to some intraday consolidation amid empty economic docket.
The GBP/USD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a range just above the 1.3900 mark, or 34-month tops set earlier this Monday.
A combination of supporting factors assisted the pair to prolong its recent strong bullish momentum and continue gaining strong positive traction on the first day of a new trading week. The British pound remained well supported by the Bank of England’s neutral policy stance, the continuous fall in new coronavirus cases and the impressive pace of vaccinations in the UK.
In fact, the UK government reached the milestone of vaccinating 15 million of its most vulnerable people, or a quarter of its population on February 15. This should allow the UK Prime Minister Boris Johnson to lift restrictions sooner rather than later and get the economy moving. This, in turn, was seen as a key factor fueling the GBP/USD pair’s strong positive momentum.
The optimism was further supported by Johnson’s latest comments that they will do everything to reopen schools on March 8. Apart from this, the prevalent risk-on environment continued undermining demand for the safe-haven US dollar and remained supportive of the bid tone surrounding the GBP/USD pair, though slightly overbought conditions held bulls from placing fresh bets.
The progress in coronavirus vaccination, along with expectations for a massive US fiscal spending plan has been fueling hopes for a strong global economic recovery and boosting investors’ confidence. Even a strong rally in the US Treasury bond yields, which jumped to the highest level since February 2020 amid the prospects for the passage of the US President Joe Biden’s proposed $1.9 trillion COVID-19 stimulus package, did little to provide any respite to the USD.
There isn’t any major market-moving economic data due for release on Monday. Moreover, the US banks will be closed in observance of Presidents’ Day. This leaves the GBP/USD pair at the mercy of the USD price dynamics and the broader market risk sentiment.
Technical levels to watch
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