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British Pound Latest - GBP Boosted by Covid Vaccine Rollout, UK Virus Cases Surge

British Pound Latest - GBP Boosted by Covid Vaccine Rollout, UK Virus Cases Surge

2021-01-04 09:00:00
Nick Cawley, Strategist

Covid-19 and Sterling (GBP/USD) Price, Analysis and Chart:

  • Sterling boosted by Oxford vaccination rollout.
  • Covid-19 cases surge in the UK with further lockdown measures feared.
  • GBP/USD touches 1.3700 but further gains may be limited.
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The UK will begin the Oxford/AstraZeneca vaccine rollout today with six hospitals expected to administer 530,000 doses of the vaccine. Described as a ‘pivotal moment’ by UK health secretary Matt Hancock, the program starts as Covid-19 cases once again soar across the country, with over 50k new cases recorded for the sixth day in a row on Sunday. The government is said to be looking at further lockdown measures as the new coronavirus strain spreads across the country, putting further pressure on the National Health Service. In an interview over the weekend with the BBC, UK PM Boris Johnson said that regional restrictions are ‘probably about to get tougher’ and that schools may be closed, although this is not something the government wants to do.

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GBP/USD printed a fresh 32-month high of 1.3704 earlier today before selling pressure pushed the pair back down to 1.3680. The daily chart shows cable supported by all three simple moving averages, although the pair remain in overbought territory, according to the CCI reading. The next likely level of resistance is the April 2018 monthly high at 1.3793, while support is expected to show up around 1.3620/1.3630.

GBP/USD Daily Price Chart (June 2020 – January 4, 2021)

British Pound Latest - GBP Boosted by Covid Vaccine Rollout, UK Virus Cases Surge
GBP/USD MIXED
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 17% -22% -8%
Weekly -4% 8% 2%
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IG retail client data show 38.61% of traders are net-long GBP/USD with the ratio of traders short to long at 1.59 to 1.The number of traders net-long is 15.84% higher than yesterday and 29.92% lower from last week, while the number of traders net-short is 3.68% higher than yesterday and 16.41% higher from last week.We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise.

Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

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What is your view on Sterling – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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