- The Bank of England’s neutral stance and optimism about vaccines pushed GBP / USD to new multi-year highs on Monday.
- Risk appetite undermined the safe-haven dollar and continued to support the positive move.
- Mild overbought conditions led to some intraday consolidation amid an empty economic schedule.
The pair GBP/USD it now appears to have entered a bullish consolidation phase and was seen swinging in a range just above 1.3900, or 34-month highs set earlier this Monday.
A combination of support factors helped the pair prolong its recent strong bullish momentum and continue to gain strong positive traction on the first day of a new trading week. The British pound remained well supported by the Bank of England’s neutral policy stance, the continued decline in new coronavirus cases and the impressive rate of vaccination in the UK.
In fact, the UK government reached the milestone of vaccinating 15 million of its most vulnerable people, or a quarter of its population, on February 15. This should allow UK Prime Minister Boris Johnson to lift the restrictions sooner rather than later and jump-start the economy. . This, in turn, was seen as a key factor driving the strong positive momentum of the GBP / USD pair.
The optimism was supported by recent comments from Johnson that they will do everything they can to reopen schools on March 8. Apart from this, the prevailing risky environment continued to undermine demand for the safe-haven US dollar and continued to support the tone offered around GBP / USD, although mild overbought conditions prevented the bulls from making further bets.
Progress in vaccination against the coronavirus, coupled with expectations for a massive US fiscal spending plan, has fueled hopes for a strong global economic recovery and boosted investor confidence. Even a sharp rally in US Treasury yields, which jumped to the highest level since February 2020 amid the prospects of passing the president’s $ 1.9 trillion COVID-19 stimulus package. Joe Biden did little to give the USD some breathing space.
There is no important economic data that moves the market that will be published on Monday. Additionally, US banks will close in celebration of Presidents’ Day, leaving the GBP / USD at the mercy of USD price dynamics and general market risk sentiment.
Technical levels
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