- GBP / USD rejected at 1.3400, falls to session lows below 1.3300.
- The pound struggles to hold at multi-month highs as the US dollar recovers.
- GBP / USD may challenge 1.3482 – CitiBank.
The reversal of the British pound From the 1.3400 area, its highest level since early September, it has been contained at 1.3265, and the pair is attempting to consolidate at multi-month highs above 1.3315.
Hopes of Brexit and COVID-19 Vaccine Support GBP
The pound accelerated its uptrend from the mid-November lows of 1.3100 in early trading on Monday, breaking the November high at 1.3315. Promising results from AstraZeneca’s COVID-19 vaccine trials and renewed hopes for a Brexit deal with the EU have boosted demand for the British pound during the London trading session.
The optimistic UK PMI Flash, which advanced a shorter-than-expected contraction in November, and a weak USD, weighed down by hopes of further monetary easing from the Federal Reserve, have helped extend the pound’s bullish momentum.
The rally, however, stopped just above 1.3400 and the pair plunged past 100 pips during the US trading session. Optimistic preliminary US PMI figures, which anticipate a performance Better than expected from the manufacturing and services sectors in November, they have increased confidence in the US economy, boosting demand for the USD.
GBP / USD may challenge 1.3482 – CitiBank
From a broader perspective, CitiBank’s currency analysis team remains optimistic about the pound’s medium-term outlook, noting the 1.3482 target: “Going forward, widespread distribution of a vaccine and an agreement on a Brexit can support the British pound. The global economic recovery in 2021 as a result of a vaccine could see the UK start to catch up. This also reduces the likelihood that the MPC will move official interest rates into negative territory (…) GBP / USD found support at the 100 SMA. The pair may challenge 1.3482, with support at 1.2982 ”.