- Hawkish BoE Supports GBP
- Be Wary of Exhaustion in Recent Trends
HAWKISH BOE UNDERPINS GBP, BUT BE WARY OF EXHAUSTION IN RECENT TRENDS
A hawkish stance from BoE reinforced a positive bias for the Pound. The central bank distanced itself from negative interest rates, saying that they will not be feasible for 6-months. This combined with a rapid covid vaccine rollout means that uncertainty over the UK outlook has eased since the turn of the year lifting the Pound. GBP bulls should pick crosses that have value.
GBP/USD: The uptrend remains intact with near-term resistance at 1.3740-60, which has capped advances in GBP, highlighting the possibility of some exhaustion in the pair. USD short-coverings could have further to run.
GBP/JPY: The cross is firmly in overbought territory as it targets last years’ high at 144.95. Firmer risk appetite and rising optimism over the UK economy has sent GBP/JPY surging. There could be more upside to be had although the fact that it is firmly in overbought territory does offer some cause for concern in the near term.
EUR/GBP: Last week EUR/GBP slumped to fresh multi-month lows at 0.8740-50with the vaccine trade in full swing. With the ECB talking down the currency and the BoE downplaying negative rates, there could be more losses to come.