GBP/USD to fall from the high skies as sterling faces an early reality check
|GBP/USD has flirted with 1.37 as investors continue pushing the pound higher after the EU and the UK reached a Brexit deal on Christmas Eve. That may change as optimism about vaccines could be outweighed by the fast spread of coronavirus, Yohay Elam, an Analyst at FXStreet, reports.
Key quotes
“Markets are happy to see Britain leave with a deal. However, it is essential to note that the accord focuses on goods and skirts dealing with services – on which the UK is reliant. Traffic jams around Dover and issues for British businesses may begin appearing and weighing on the pound. Scottish demands to leave the UK and rejoin the EU may further weigh on sentiment.”
“Regulators approved the University of Oxford/AstraZeneca vaccine late in 2020, adding to the green light for the Pfizer/BioNTech immunization. The homegrown jab will reach Brits' arms on Monday, yet its efficacy rate is only around 70% in comparison to 95% in the Pfizer/BioNTech and Moderna jabs. Moreover, the pace of vaccinations is slower than expected.”
“COVID-19 is raging in the UK due to the new contagious strain. Prime Minister Boris Johnson has been urged to announce a new nationwide lockdown, putting the whole country on the highest Tier 4 restrictions – or even new Tier 5 ones. Any announcement of new restrictions could weigh on sterling.”
“Resistance is at the daily high of 1.3703, which is also the highest since 2018. Support awaits at 1.3620, a high point around Christmas, followed by 1.3525 that capped the pair last week.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.