Support for Sterling Pushed GBP/USD to Key Level

Barbara Zigah

Analysts also say that it is very possible that the largest economic contraction in three centuries could be on its way to a reversal given the relentless efforts.

GBPThe pound sterling continues to march higher against its key rivals, namely the US dollar and the euro, and in early trading in London touched a fresh 3-year peak against the greenback. Forex traders, it seems, are holding fast to their belief that the UK government's aggressive rollout of the coronavirus vaccine will help bring about the country's economic recovery at a quicker pace than its neighbors. Analysts also say that it is very possible that the largest economic contraction in three centuries could be on its way to a reversal given the relentless efforts. Concerns that the Bank of England might introduce a negative rate environment also seem to have been temporarily put aside, while there is still some support for the government's avoidance of a no-deal Brexit.

In London trade as of 10:55 am, the GBP/USD was trading at $1.4023, a gain of 0.1135% and sliding off the session peak of $1.40529. The EUR/GBP was higher at 0.8648 pence, up 0.0266%; the pair has ranged from a low of 0.86683 pence to a high of 0.86352 pence. The GBP/JPY was higher at 148.1600 yen, up 0.3821%, off the session high of 148.313 yen.

Fundamentals to Watch Ahead

Later today, the British prime minister will be speaking, and analysts say that Boris Johnson's comments could provide some short-lived movement for the pound. Also due out later today is a speech from the head of the European Central Bank, Christine Lagarde. Her comments could also help to shift sentiment for the Euro which has been struggling relative to its UK rival. Looking ahead to Tuesday, UK labor data will also be due out; the Office of National Statistics will release the claimant count change as well as average earnings, with and without bonuses. Analysts polled are expecting to see a significant rise in the numbers of claims in January, up to 35,000 from 7,000 At the same time, average earnings is likely to have risen for the 3-month period through December.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.

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