- GBP/USD consolidates at two-month highs around 1.3250.
- Coronavirus vaccine’s news and Brexit deal hopes boost demand for the GBP.
- Technically, the pair should remain above 1.3200 to keep its upward momentum – UOB.
The pound is pushing higher on Tuesday, extending its bull run from last week lows at 1.2850 to fresh two-month highs at the mid-range of 1.3200. Upbeat news of a COVID-19 vaccine and hopes of an imminent Brexit deal have increased demand for the sterling.
Pound appreciates on COVID-19 vaccine and Brexit news
The sterling is appreciating across the board on Tuesday, trading 0.5% up against the US dollar, buoyed by hopes that a COVID-19 vaccine will help to shore up UK economy. The impact of the promising results of a potential cure for the coronavirus has been particularly positive for the British pound as it might make a huge difference for the UK, which is one of the worst coronavirus-hit countries in Europe.
Furthermore, market rumours about progress on the Brexit negotiations with the EU have increased confidence on the GBP further. UK officials have suggested that the parties might have brought positions closer, which feeds hopes of a trade deal before the December 31 deadline.
GBP/USD should stay above 1.3200 to keep the upward momentum – UOB
From a technical perspective, the UOB’s FX analysis team thinks that upward momentum has improved, but warns that the pair should stay above 1.3200 to fend bears off: “While upward momentum has improved, GBP has to move and stay above the major resistance at 1.3200 before further sustained advance can be expected’. GBP edged above 1.3200 yesterday (09 Nov) but eased off after touching 1.3207 to end the day little changed at 1.3162 (+0.09%). Another attempt to move clearly above 1.3200 is not ruled out just yet and only a break of 1.3065 (no change in ‘strong support’ level) would indicate that the current upward pressure has eased.”
Technical levels to watch
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