GBP price, news and analysis:
- GBP continues to advance strongly against major currencies other than AUD and NZD, and that strength will likely persist medium term.
- However, there is a near-term risk of a correction, with GBP/USD overbought on the hourly chart.
GBP/USD strength to continue, correction possible first
The British Pound continues to advance against the US Dollar, the Euro, the Japanese Yen, the Canadian Dollar and the Swiss Franc on the perception that a successful vaccine program in the UK will help the country rebound more quickly than many others from the downturn caused by the Covid-19 pandemic.
Sterling is even holding its ground against two other currencies favored by investors – the Australian Dollar and the New Zealand Dollar – and its overall strength looks set to continue although, as always, a correction could come at any time before its uptrend resumes.
As the chart of GBP/USD below shows, the pair is now hovering around overbought levels, with the relative strength index (RSI) close to the 70 mark that indicates an overbought market.
GBP/USD Price Chart, Hourly Timeframe (February 4 – 24, 2021)
Source: IG (You can click on it for a larger image)
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As the chart also shows, there was a brief spike higher in GBP/USD in Asian trading Wednesday but no obvious reason why it happened.
In the news, a so-called roadmap out of the UK’s current lockdown designed to halt the spread of the coronavirus, presented by Prime Minister Boris Johnson, has been broadly well received. Talk of vaccine passports to help businesses open up is more controversial but would also be well received by some and there is optimism that Chancellor of the Exchequer Rishi Sunak will build on the Government’s plans to lift restrictions in his Budget next Wednesday.
Reports suggest Sunak will push back a review of the Government’s fiscal rules to allow him to prioritize spending to boost the economy.
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— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex