GBP/USD: Britain’s covid vaccine achievements to allow the pound to extend its recovery

GBP/USD has been recovering as the US yields retreat from their highs. According to FXStreet’s Analyst Yohay Elam, sterling is set to resist dollar storm on vaccine milestone and improving technicals, with the cable setting higher highs.

Key quotes

“The UK’s rapid immunization campaign is having a material effect in pushing death rates down, and sterling up, allowing it to weather dollar strength. Vaccines allow Britain’s gradual reopening to proceed with confidence, especially after the country reached 50% of all adults. The downside comes due to clashes with the EU over imports and exports of doses. Brussels has threatened to block shipments and UK Prime Minister Boris Johnson will reportedly call leaders on the continent to calm things down.”

“The UK is already suffering from potential issues with vaccine supplies from India and may and another delay would postpone the administering of second doses. Nevertheless, the campaign may have reached a point of no return where a significant part of the population has enough immunity to prevent new lockdowns. Such optimism may continue supporting the pound.”  

“The next moves for the greenback are also set to come from the Federal Reserve. Chair Jerome Powell will deliver a speech on Monday, the first out of three public appearances in which he will likely reiterate his message of ongoing support – and dismissal of inflation concerns. Bond auctions due out later in the week are also eyed.”  

“Pound/dollar has been setting higher lows since it hit a low of 1.3775 in early March. This is a bullish sign that counters downside momentum on the 4-hour chart. Cable is also trading under the 50, 100 and 200 Simple Moving Averages.”