GBP/USD to run higher above critical resistance at 1.37

GBP/USD has been hovering below 1.37 as markets digest Biden and Powell’s speeches. The UK’s vaccination campaign and weak US data may push cable above the strong 1.37 resistance as Friday’s 4-hour chart is painting a bullish picture, Yohay Elam, an Analyst at FXStreet, informs.

Key quotes

“It is highly unlikely that President-elect Joe Biden raises taxes as his first move but markets are focusing on his comment that ‘everybody must pay their fair share’ rather than the massive $1.9 trillion stimulus. The risk-off mood in markets is weighing on the safe-haven dollar.” 

“Jerome Powell, Chairman of the Federal Reserve, put to rest speculation of an early reduction of the Fed’s bond-buying scheme. Prospects of early tightening pushed the greenback higher earlier in the week. On Friday, US ten-year bond yields continue their decline and may push the dollar lower.”

“Retail Sales figures for December may show ongoing weakness, and so can preliminary Consumer Sentiment data for January. The winter wave of coronavirus continues hitting the US hard and the lapse of government support programs was also being felt late last year. Additional weak data may add to the case for more buying of bonds rather than reducing them.”

“Prime Minister Boris Johnson is under pressure from a group of right-wing Conservative Party members who want him to loosen lockdown measures. While the focus is on political gossip, there may be the reason for optimism regarding loosening limits, as cases are falling. Perhaps more importantly, Britain aims to supercharge its vaccination campaign, hitting 500,000 people per day from next week.”

“Critical resistance is at around 1.37-1.3705, which is now a triple-top after halting the pair’s ascent in once again. Beyond 1.37, the next levels to watch are 1.3730, 1.3810, and 1.40 – all dating to 2018. Support awaits at 1.3610, Thursday’s low, followed by 1.3545 and 1.3450.”