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 GBP/USD Erased Overnight Losses to Surge Over Mid-1.2500 - Multiple Factors to Know!

EagleFX

The GBPUSD currency pair succeeded in stopping its early-day losses and took bids above mid-1.2500 level due to modest upbeat trading sentiment backed by the vaccine success hopes that undermined the broad-based U.S. dollar and contributed to the currency pair gains. The reason for the currency pair's bullish bias could also be attributed to the fresh optimism about easing of lockdown restrictions in Leicester, and few other second-tier catalysts also supported the quote. Whereas, China's latest warnings to the U.K. over the Huawei ban issue limited the optimism surrounding the British Pound. At this moment, the GBP/USD currency pair is currently trading at 1.2542 and consolidating in the range between 1.2540 - 1.2571.

It is worth reporting that Leicester's citizens got mild freedom after easing lockdown restrictions, which offered additional strength to the pair. The currency pair gains were further bolstered by the report that the U.K. Prime Minister Boris Johnson is expected to inject 3 billion pounds into England's National Health Service (NHS) to curb the resurgence of the coronavirus. The announcement favored the Britsh Pound and contributed to the currency pair gains.

However, the reason for the pair's gains could also be associated with the U.K. Government plan that Tory's are expecting to back the internal trade as a free move post-Brexit. This, in turn, underpinned the British Pound and became a key factor supporting the currency pair.

Apart from this, the modest upbeat market sentiment was supported by the hopes about the coronavirus vaccine, which overshadowed the concerns about surging COVID-19 cases in the U.S.. Dr. Anthony Fauci, the leading expert on infectious diseases in the U.S., also hinted that the country would meet its goal regarding COVID-19 vaccine by year's end, spurring hopes of an economic recovery.

Apart from the U.S., the U.K. scientists have also reported their breakthrough. A trial for a COVID-19 vaccine being developed by researchers at Oxford University involving 5,000 volunteers is currently underway in Brazil. Pharmaceutical company AstraZeneca (LON: AZN) has also agreed to mass-produce the vaccine.

As in result, the U.S. stock futures and equities in Asia-Pacific remain mildly bid while the U.S. 10-year Treasury yields seesaw around 0.62% at the press time.

Despite the ever-increasing number of new coronavirus cases and the possibility of renewed lockdowns, the broad-based U.S. dollar failed to put any bid and reported losses on the day. However, the losses in the U.S. kept the pairs' prices high. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.07% to 96.250 by 9:55 PM ET (2:55 AM GMT).

At the China-UK front, the pair traders got an additional burden after the Dragon Nation showed readiness to fight the U.K.'s ban over Huawei. As we know, the Dragon Nation became the enemy of many western countries after the passage of the Hong Kong security law.

In the absence of significant data/events on the day, the market traders will keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum. As well as, the traders will keep their eyes on the virus updates and news concerning China. Though, the U.S. Michigan Consumer Sentiment Index, expected 79.00 against the previous 78.1, could offer intermediate moves.


Daily Support and Resistance

S1 1.2357

S2 1.2462

S3 1.2508

Pivot Point 1.2567

R1 1.2613

R2 1.2672

R3 1.2777

The GBP/USD is consolidating at 1.2550, holding over the support mark of 1.2548 level. The 50 periods EMA is likely to support the GBP/USD pair's bullish bias as the four hourly candles are closing over this. Besides, the RSI is holding, in fact, tossing above and below 50, suggesting neutral bias among traders. A bearish breakout of this mark can prolong selling unto 1.2506 and 1.2479 support. Conversely, the GBP/USD pair can meet resistance at 1.2575 and 1.2595. Good luck!

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