- GBP/USD bulls are unstoppable near the highest since April 2018.
- UK PM Johnson eyes rapid testing for reopening nightclubs and theatres.
- Britain’s virus infections drop to the lowest since October 2020 as Tory government crossed jab target.
- US Traders’ reaction to stimulus hopes, virus/vaccine optimism, on return from extended weekend, will be the key.
GBP/USD stays on the front-foot around the mid-1.3900s, up 0.30% intraday, while heading into the London open on Tuesday. The cable has been on the front foot for the last three days following the UK’s ability to reach its covid vaccine benchmark of 15 million. The Tory-action also gained good covid results, which in turn renewed chatters over easing virus-led activity restrictions. Also favoring the sterling bulls could be the broad US dollar weakness amid hopes of the US coronavirus (COVID-19) stimulus package. Moving on, a light calendar may not stop the further upside as markets await the US traders to kick-start the week’s trading and welcome the risk-on mood.
Having reached the jab milestone, UK PM Boris Johnson The PM suggests, per The Sky news, the use of lateral flow tests could help reopen those businesses that have been “the toughest nuts to crack”. The news also mentions the Tory leader’s hints of this lockdown to be the last while warning “cautious easing.”
Also on the positive side could be The Guardian’s news saying, “The UK will look at making excess doses of coronavirus vaccinations available to other nations after it has vaccinated its adult population, vaccine deployment minister Nadhim Zahawi said on Monday.”
It’s worth mentioning that the plan for the post-Brexit Northern Ireland hotline for officials as well as a reduction in the hurdles for the much-awaited US covid relief package adds to the market’s upbeat sentiment.
On the contrary, researchers at the University of Edinburgh found the COVID-19 variant, known as B1525, with a potentially worrying set of mutations has been detected in the UK and should be targeted in surge testing, per The Guardian. Additionally, chatters over the need for the tax hike by British Chancellor Rishi Sunak, as conveyed by the UK’s leading think tank, also challenge the quote’s further upside.
Amid these plays, S&P 500 Futures refresh record top while the FTSE 100 Futures also take the bids by the press time. Additionally portraying the risk-on mood could be the US Treasury yields and the fresh monthly low of the US dollar index (DXY).
Moving on, a light calendar and China’s absence may probe the GBP/USD ahead of the US traders’ return after Monday’s holiday. Following that, extra clues on American President Joe Biden’s virus aid package should add to the optimism while virus data/vaccine updates may offer extra clues for the pair traders.
Technical analysis
Bullish MACD signals join the cable’s sustained trading above a one-week-old support line and 10-day SMA to hint at the further upside. In doing so, the 1.4000 psychological magnet gains the immediate attention of the GBP/USD buyers. However, any further upside will have to cross the upper line of an ascending trend channel from November 02, at 1.4030 now. Alternatively, pullback moves can attack a support line from February 04, at 1.3842 now, a break of which will eye the 10-day SMA level of 1.3794.
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