The pair jumped to the resistance level 1.4240 before retreating quickly amid profit-taking selling that was mentioned a lot, with the technical indicators reaching strong overbought areas, reaching the support level of 1.4082 before settling around 1.4140 at the beginning of trading on Thursday. I mentioned a lot that the sterling is exposed to more gains amid the most prominent global progress in the British vaccination against Corona, which contributed to the decisions of the British government to announce a road map with specific times to end the restrictions of the Corona virus. The sterling gains against the dollar reached their highest in three years.
Commenting on the distinctive gains of the pound in the Forex market against all other major currencies, analyst Matthew Wheeler, head of market research at GAIN Capital reveals the single most important factor driving the rally in the GBP / USD exchange rate that saw a rally above 1.4200 highs. Facing the global pandemic COVID-19, Brexit, political turmoil in the United States, and countless other storylines, and overall there has been one consistent trend in the foreign exchange market over the past six to 12 months: a relentless attempt to buy GBP / USD pair.
After hitting a low near the 1.1500 support as COVID concerns peaked in March, the world's third most-traded currency pair rose over 2,600 points in the past 11 months to break the 1.4100 high this week.
While there are countless reasons for any movement in the market, the single biggest factor driving the continued rally in the GBP / USD pair is bond yields, or specifically the difference between short-term yields on British bonds and US Treasury bills. Yields on UK 2-year bonds have risen faster than their rivals in the United States, representing a combination of Brexit relief, vaccination distribution, and near-term economic recovery prospects.
Overall, the tightening of the spread between short-term bonds in the UK and the US makes the UK (and thus the British pound) more attractive to global investors.
This week British Prime Minister Boris Johnson has laid out the government's roadmap to exit from the lockdown which shows that a return to normal life is only likely by June at the earliest, but economists said the cautious approach would still put the economy on track for a strong recovery. Johnson said reopening the economy will begin with the return of schools on March 08, with restrictions further eased at the end of March. The program will culminate in the reopening of nightclubs, mass events and the abolition of all restrictions by June 21, provided that they are planned.
Meanwhile, Johnson said he would "cautiously but irreversibly" open the country.
According to the technical analysis of the pair: the general trend of the price of the British currency pair against the dollar, GBP / USD, remains bullish as long as it is stable above the psychological resistance 1.4000. The recent bullish breaches have stopped in light of the arrival of technical indicators to strong saturation areas, which is a natural situation to activate sales to reap profits, but at the same time does not stop the trend, as every decline will be an opportunity for forex investors to return to buy the sterling. The closest support levels for the pair are currently 1.4090, 1.4000 and 1.3920, respectively.
I still prefer to buy the pair from every downside as long as the British advance in the pace of vaccination and abandon the restrictions of Corona in place.
As for today's economic calendar data: There are no significant UK economic releases today. All focus will be on the US economic data, where the most important news will be the growth rate of the US economy, durable goods orders, US jobless claims weekly and pending US home sales
