- GBP / USD is still struggling to regain the 1.3600 level and has reversed below the high figure and towards 1.3550.
- The coin underperformed this week as England returned to a March 2020-style lockdown and on BoE’s NIRP stakes.
The pair GBP/USD it is still struggling to regain the 1.3600 level and after hitting a ceiling below 1.3640 a few hours ago it has reversed below and towards 1.3550. Below and around this level, the pair should find solid support, as has been the case for most of the week so far. Currently, the pair is trading flat on the day just north of the 1.3550 mark.
The pair did not generally respond to recently released US labor market figures. The report was disappointing – the United States posted a surprise 140,000 net job loss in December – but markets already see the data as out of date. Massive vaccines, more fiscal stimulus from a Democrat-controlled Congress, and a much better global growth outlook mean markets expect employment numbers to improve substantially once the dark Covid-19 winter of 2021 is over. Hence the which is why the equity markets, crude oil markets and US bond yields continue to rise.
Pound week
GBP / USD is near the bottom of the G10 performance chart for the week. The JPY’s recent underperformance due to rising US-Japan rate spreads has been the only thing that saved the currency from its lowest point.
As a reminder, the coin underperformed earlier in the week when England returned to a March 2020-style lockdown to curb the still rapidly accelerating spread of the most transmissible new strain of Covid-19 discovered in the fourth quarter of 2020. overwhelmed in the coming weeks abound; the executive director of NHS England said the NHS will be overwhelmed in two weeks if the current rate does not drop “significantly”
However, there is light at the end of the tunnel in which the UK is making excellent progress (compared to its international peers anyway) with its mass vaccination program; The UK prime minister said that as of Thursday, the country had vaccinated 1.5 million people and averaged a vaccination rate of 50,000 per day. To reach the government’s goal of vaccinating 13 million people by mid-February, 300,000 people will need to be vaccinated, but with the help of the military, the goal seems feasible. On Friday, the UK approved the Modern Covid-19 vaccine, the third vaccine approved in the country. In other good news, Pfizer said its vaccine appears to be effective against the UK and South African variants based on laboratory testing.
On the other hand, another factor that weighed on the GBP this week was that the market raised its bets for the Bank of England to push interest rates into negative territory in 2020; Given the double dip recession, the second wave of Covid-19 has almost certainly dragged the country back, MUFG “now believes that the Bank of England will cut rates to negative territory on February 4 … hence the which is why the British pound will continue to underperform in currency markets. “
GBP / USD forming a descending triangle
GBP / USD is forming a descending triangle that may be subject to a downside breakout (a breakout that may coincide with a move above 90.00 in the dollar index). The pair has been hitting lower highs all week; 1.3700 on Monday, 1.3670 on Tuesday and around 1.3640 on Friday. 1.3530-1.3550 has acted as a floor for price action so far, but the level could rise, opening the door for a downward move towards 1.3500 and the 21-day moving average at 1.34857.
Hour chart
Technical levels
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