- The rapid COVID-19 vaccinations programme in the UK underpins sterling.
- The upbeat market mood hit demand for the safe-haven USD.
The GBP/USD rose to a fresh 34-month high and has since retreated to the lower end of its daily traded range. Although it is holding above 1.39.
The Bank of England’s neutral stance continued to benefit the Pound. As did falling covid cases and the impressive number of vaccinations meaning the UK could reopen its economy sooner rather than later.
This, along with a soft tone surrounding the US dollar offered further support to the GBP/USD.
COVID-19 vaccinations and expectations for a huge US fiscal stimulus package have been fueling the optimism over a strong global economic recovery. This is boosting risk appetite reflected in the ongoing equity market rally whilst undermining the safe haven greenback.
The US bond market has been pricing Joe Biden’s proposed $1.9 trillion stimulus package. 10-year US government bond yields reached fresh 13 month highs but failed to boost the US Dollar.
Bullish traders are showing caution given the slightly overbought conditions on short-term charts keeping GBP/USD from pushing higher. The near term bias is still bullish with the key 1.40 psychological target in focus.