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  • GBP/USD remains steady at two-month highs near 1.3200.
  • Pound, supported by market hopes of a COVID-19 vaccination.
  • A clear break of 1.3174/84 might send the GBP towards 1.3247 – Credit Suisse.

The pound sterling has remained steady near two-month highs, buoyed by market optimism about a coronavirus vaccine and Biden’s victory in the US elections. The pair has been unable to breach the 1.3200 level so far although downside attempts have been contained above 1.3120.

GBP strengthens on hopes of a COVID-19 vaccine

The sterling surged about 0,5% earlier today after the drugmaker Pfizer announced that early analysis of its coronavirus vaccine shows a 90% effectiveness, a much better than expected success rate. This news has boosted market sentiment, sending equities higher across the globe and pushing the pair to test fresh two-month highs at 1.3200.

Beyond that, Biden’s victory in the US Presidential elections has contributed to lifting investors’ sentiment. The market anticipates a more pro-trade approach to international relations, while in the US, the odds of a fiscal stimulus agreement have increased substantially.

On the negative side, the lack of progress on a post-Brexit deal, after two weeks of intensive negotiations is weighing on the sterling. Representatives from the EU and the UK are expected to resume talks in London this week, yet, with the deadline to exit the EU on December 31, the possibility of an unfriendly divorce grows bigger by the day.

GBP/USD: Above 1.3174/84 might aim towards 1.3247  – Credit Suisse

From a technical perspective, the Credit Suisse FX analysis team sees the pair aiming to 1.3247 on a clear break of 1.3174/84: “GBP/USD has extended its defence of key price support at 1.2863/46 for the completion of a bullish ‘outside week’ and with the market back above its 13 and 55-day averages we look for a clear break above resistance at 1.3174/84 – the October high and 61.8% retracement of the September/October fall – for a challenge on the ‘neckline’ to the August top, currently at 1.3247.“

Technical levels to watch