GBP Stands to Outperform on Vaccine Rollout
A rather quiet start to the week as market participants await key risk events in the form of the FOMC meeting and several large-cap earnings. Nonetheless, risk sentiment is off to a firm start, which has come to the benefit of the Pound this morning, which hovers around the 1.37 handle. As I had mentioned last week, the vaccine trade is in full swing for Sterling, which stands to outperform against its counterpart given the successful vaccine rollout program thus far. This is particularly the case vs the Euro, which has faced supply disruptions with AstraZeneca cutting deliveries by 60% in Q1.
EUR/GBP Outlook Remains Weak
Taking a look at the technicals, the outlook for EUR/GBP remains weak with last weeks brief break below key support at 0.8860 suggesting as much. Alongside this, the subsequent bounce back above 0.8900 had been quickly faded, signalling that the market is fading rallies in the cross. As such, with 0.8860 back in focus, another break below places the Jan 21st low in focus at 0.8839. On the topside, resistance resides at 0.8900 and 0.8915-20.
EUR/GBP Chart: Daily Time Frame
GBP Paring Friday’s Overreaction
The uptrend remains for GBP/USD with market participants quick to buy the dip. Friday’s price action following the unsurprisingly weak PMI figures can be described as somewhat of an overreaction and thus today’s tone appears to be a paring of Friday’s selling. Alongside this, while the short-term risks over COVID remain a concern, the Pound continues to benefit from the vaccine rollout plan, suggesting that economies that have been worst affected, stands to benefit the most.
GBP/USD Chart: Daily Time Frame
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