The GBPUSD currency pair successfully extended its previous day's winning streak. They took bids above the mid-1.2600 level while represented 0.27% gains on the day mainly due upbeat trading sentiment, which 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 hopes of another stimulus from the U.K. and efforts to tame the coronavirus (COVID-19) also added strength to the cable pairs. In the meantime, the pair's gains were further supported by optimism about the virus vaccine.
At this moment, the GBP/USD currency pair is currently trading at 1.2634 and consolidating in the range between 1.2622 - 1.2667. However, the traders seemed cautious to place any strong bids ahead of a speech by the BOE Governor Andrew Bailey and British Home Secretary Priti Patel for fresh impetus. Despite the continued rise in the number of coronavirus cases globally and the on-going Sino-American conflict, the market traders cheered Friday's optimism, backed by expectations of further stimulus and virus vaccine news that eventually restricted the safe-haven demand.
As per the latest report, the U.S. recorded 59,747 new infections in the last 24 hours, as per the Johns Hopkins University. At the same time, the total number of cases in the U.S. crossed the 3.3 million mark. The global figures crossed over 13 million, with more than 565,000 people killed in the last 7-months due to the virus, as Global institute reports' tally. As we know, the U.S. leads the race; unfortunately, Brazil and India also followed the footstep of the U.S. The latest figures from Florida suggested over 15,000 new cases on Sunday after the further push for reopening schools and anti-mask protests.
Despite this, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day. However, the losses in the U.S. dollar could be attributed to the uptick in the U.S. stock futures. However, the losses in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.17% to 96.448 by 10:03 AM ET (3:03 AM GMT).
On the U.K. side, the U.K. Finance Minister Rishi Sunak is expected to introduce sweeping tax cuts and revised planning laws in up to 10 new "free ports" across the U.K. as parts of plans for post-Brexit economic revolution. Let me remind you; the Chancellor also delivered multi-billion pounds of the package during the last week. However, this statement also exerted some positive impact on the British Pound and contributed to the pair's gains.
Moreover, the news that a cross-party group of politicians will examine the country's pandemic situation and overcome the coronavirus crisis also favored the currency pair. The buyers also took clues from the research undertaken by Oxford University suggesting positive results of vaccine and Professor Robin Shattock said that there would be enough vaccine for each of the British people in the first half of 2021 if trials succeed. This statement also boosted the currency pair.
On the negative side, the long-lasting UK-EU talks again stopped during the last week due to the "significant differences," as per the Bloomberg. As a result, the British Cabinet Minister warned businesses to stay prepared for the Brexit, irrespective of the current discussions' outcome. However, the Brexit on-going uncertainty kept a lid on any additional gains in the pair.
At the UK-China front, the U.K.'s Justice Minister Robert Buckland recently said that "we will continue to be strong and frank with China where we think they have overstepped the mark." As well as, he said, "Britain's relationship with China will have to be honest if it is to endure." However, the Pounds traders did not give any major attention to the above comments.
Looking ahead, the British diplomat Priti Patel will offer further details of her point-based immigration system. Moreover, the Bank of England Governor Andrew Bailey is set for participating in the panel discussion titled "Libor: Entering the Endgame." In the meantime, the BOE Chief will be accompanied by the Federal Reserve Bank of New York officials to speak about the key rate.
Daily Support and Resistance
S1 1.2423
S2 1.252
S3 1.2571
Pivot Point 1.2617
R1 1.2668
R2 1.2715
R3 1.2812
The GBP/USD pair has violated the upward channel at 1.2600, below this, the Cable is likely to drop until 1.2525 level. The 50 periods EMA is expected to provide support at 1.2540, while the bearish breakout of this level can extend selling until 1.2402. On the higher side, 1.2670 is working as a double top, while a bullish breakout of 1.2670 can extend the buying trend until 1.2797 level. Let's consider selling below 1.2610 and buying above the same. Good luck!