Daily Market Recap - GBPUSD

The British Pound is rallying against the US Dollar on Wednesday after the UK House of Commons approved both the Brexit trade deal and the Oxford Astra Zeneca vaccine earlier in the day. The GBPUSD is currently trading at multi-year highs around the 1.362 mark.

Weakness in the greenback is providing added impetus to the GBPUSD with news that the US Senate is postponing its decision on increasing the covid-19 relief payments leaving the Dollar under pressure and prone to further losses.

However, the outlook on the GBPUSD remains mixed due to the worsening health situation in the UK. Official statistics showed a record of 53k new covid-19 infections on Tuesday, a record for the country since the start of the pandemic. Tougher restrictions are expected to be implemented, with more areas of England poised to be placed into tier 4 in the coming days.

The US Dollar will likely see some increased volatility tomorrow with the release of the latest US jobless claims figures. The forecast points to a sharp rise in initial claims last week, an indication of the continued deterioration in the US labor market. Should unemployment figures increase more than expected, the outlook on the US economy will deteriorate, in turn driving down the value of the greenback.

From a technical perspective, the main trend in the GBPUSD is up according to the daily chart. The next hurdle to overcome for bulls will be the years high at 1.36253. A firm close above will open the door to a test of the 1.37493 resistance level.

(Chart Source: Tradingview 30.12.2020)

On the flip side, failure to hold above the psychologically significant 1.36 mark will leave the GBPUSD vulnerable to a short-term correction. Mean reversion could drive the pair back down towards the 1.35149 support level as markets continue to evaluate the efficacy of lockdown restrictions on the spread of the covid-19 pandemic in the UK.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.