The pair will likely rebound as investors predict a relatively resilient UK economy even as the Omicron risks rise.
Buy the GBP/USD and set a take-profit at 1.3500.
Add a stop-loss at 1.3300.
Timeline: 1-2 days.
Set a sell-stop at 1.3300 and a take-profit at 1.3200.
Add a stop-loss at 1.3400.
The GBP/USD pair was little changed on Monday morning even as the UK confirmed that the Omicron variant had landed in the country. The pair is trading at 1.1335, which is a few points above the lowest level this month.
UK New Omicron Cases
Omicron will be the focus among investors and policymakers this week. The new variant was announced on Friday, pushing more countries to announce restrictions from South African countries. The UK was among the first countries to announce that it will restrict travellers from South African countries.
The UK confirmed three new cases of the variant and health officials believe that the number of cases will keep rising. Other European countries like the Netherlands also confirmed new cases.
Still, the government reiterated that the country will not impose new lockdowns in its fight against the variant. In a statement, Sajid Javid, the health minister, said that the government will not impose these restrictions.
However, Boris Johnson announced that the government will add some measures to prevent the virus. They include wearing masks in public transport and in shops.
In addition to the virus situation, the GBP/USD pair will react to a number of events today. In the UK, the Bank of England (BOE) will react to the latest mortgage data. The Bank of England (BOE) will publish the latest mortgage application and approvals data.
Analysts expect the data to show that mortgage approvals fell to 71.25k, which was lower than the previous 72.65k. In total, mortgage lending declined from 9.52 billion pounds to more than 4.75 billion pounds.
The pair will also react to the latest US pending home sales numbers. Analysts expect the data to show that pending home sales rose by 1% in November. Jerome Powell will also hold a testimony in Congress.
The GBP/USD pair has been in a bearish trend lately. The pair dropped below a key support level at 1.3415, which was the lowest level in October. It also passed the support at 1.3358, which was the lowest level on November 12. It has also moved below the 25-day moving average.
Therefore, the pair will likely rebound as investors predict a relatively resilient UK economy even as the Omicron risks rise. This could see it rise to the key resistance level at 1.3500.