- GBP / USD falls to a new low since December 12.
- Covid cases in the UK decline before the second phase of the virus vaccination, but weekend readings are less reliable.
- Activity restrictions increase in the UK, travel corridors close.
- Coronavirus numbers in the US remain high, but the political game and risk-off sentiment favor the US dollar.
He GBP / USD remains on the defensive near 1.3550, the lowest level since last Tuesday, at the start of the European session on Monday. Although UK coronavirus numbers have improved over the weekend, virus variant fears and new restrictions weigh on the British pound as the US dollar benefits from risk-off sentiment. Given the US public holiday, updates on the virus in the UK and news about the second phase of vaccinations in England will be key.
Following the recent spike in the number of covid cases and the death toll, which led to the third lockdown in the UK, the country reported 38,598 new coronavirus cases on Sunday, the lowest since December 27. Even so, weekend numbers are generally less reliable due to late reporting, and therefore do not please the pair’s bulls. By contrast, new activity restrictions for travelers in the UK weigh on risk.
It’s worth mentioning that the U.S. Centers for Disease Control and Prevention (CDC) reported 23,653,919 coronavirus cases on Sunday, an increase of 213,145 from its previous count, and said the death toll had increased by 3,557 to 394,495, according to Reuters.
Aside from the virus problems, the cautious feeling before the arrival of US President Joe Biden to the White HouseAs well as doubts about Iran’s initial policies and challenges, they put additional negative pressure on risk. In addition, the blocking of ports due to the lack of clarity in the terms of Brexit also weighs on the British pound.
Against this backdrop, US and UK stock market futures remain under pressure, while the US dollar DXY index rises to a fresh one-month high at time of writing.
During today’s session, GBP / USD investors will keep their eyes on virus updates and vaccine news from Britain for further momentum as US markets are closed due to the Martin Luther day holiday. King. Still, news reporting additional details about the Biden stimulus and any other difficulties for the next government can also influence the pair’s price action.
GBP / USD technical analysis
The month-long rising wedge formation on the four-hour chart keeps GBP / USD sellers hoping to revisit the prior month’s low near 1.3130. Furthermore, sustained trade below the pattern support at 1.3535 and the 200-period SMA near 1.3480 will add filters to the downside. On the other hand, 1.3615 and 1.3670 may entertain short-term bulls before they aim to challenge an ascending trend line from Jan 4, now at 1.3710.
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