Whilst sentiment suggests there is potential for us to stop the spread of Covid, building upon the vaccination rollout and quarantine; can GBP build on its recent gains?
GBP & USD
A sharp pick up in GBP strength has held its gains over the evening with strong expectations that the UK economy will continue to bounce back. Industrial volumes of USD were being purchased over 1.39 yesterday, the first time in over 2 years. The additional gains means that GBP is the second-best performing major currency of 2021, with only the oil-fuelled Norweigain Krone outperforming.
BUT! Is this too much too soon and will the rally eventually hit the buffer? Putting Covid aside, many sceptics still believe our relationship with the EU is now built on sand, and we could find our new ‘Brexit rules’ under greater pressure as the year unfolds. Let’s hope the recent gains are “irreversible”, much like the next phase of Boris’ easing of restrictions.
Building on the above, support levels are now placed a 1.1320 with JP Morgan eying an upside target of 1.1534 in the coming week.
Have a good day!