British Pound (GBP) Outlook: Sterling Continues to Profit as UK Government Mulls Unlocking the Economy
British Pound (GBP) Price Outlook – Neutral to Bullish
- UK vaccination program passes 15 million.
- Sterling pushing higher across the board.
The UK government hit its ambitious target of 15 million vaccinations over the weekend, two days ahead of schedule, with one in four adults vaccinated. The government is now looking to vaccinate another 17.2 million people before the end of April. The success of the vaccination program is now allowing the government to consider lifting some lockdown restrictions from mid-March in an effort to re-boot the economy. UK PM Boris Johnson is expected to unveil his plans in a speech on February 22.
GBP/USD continues to grind higher as investors begin to price-in the ongoing benefits of the government’s vaccination program. The UK economy remains weak and the government is hoping that when lockdown measures are ended that the UK population will start spending again. Last week, Bank of England chief economist Andy Haldane predicted that the UK economy would bounce back ‘like a coiled spring’ with consumers set to spend up to GBP250 billion of savings. The weekly GBP/USD chart shows a strong bullish trend starting in May last year, taking out old horizontal highs. Cable has only had two negative weeks in the last 15 weeks and 1.4000 beckons. Above here, the mid-April 2018 high of 1.4377 is the next target.
GBP/USD Weekly Price Chart (May 2017 – February 15, 2021)
Retail trader data show 32.09% of traders are net-long with the ratio of traders short to long at 2.12 to 1. The number of traders net-long is 10.80% higher than yesterday and 1.79% lower from last week, while the number of traders net-short is 0.39% lower than yesterday and 9.26% 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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