GBP/USD Trades Near Three-Year High, Investors Remain Cautious
- Investors exercise caution regarding Brexit
- The US stimulus package remains in the pipeline
GBP/USD Trades Near Three-Year High
The GBP/USD pair is trading near the 1.3700 levels, reaching a three-year high. The pair is now hovering near 1.3670. After heading lower on the day as market participants remain cautious over the Brexit developments, issues related to the Covid-19 situation, and the vaccine rollout.
The 1.3700 marks is currently keeping a lid on the pair. As traders and investors have not been able to produce a clean daily close above it since the pair pierced the level on Jan 4 for the first time since May 1, 2018. Presently, the pair is under pressure as a result of the new Covid restrictions in the UK. As well as the overall risk-off mood across the markets, which is causing investors to seek safety in the USD.
The Cable was able to record a strong bounceback. This comes following the market meltdown in March last year when the pandemic first hit the financial sphere. Since the lows in March 2020, the GBP/USD has appreciated nearly 20% to the current market price. As investors supported the Sterling through the uncertain and seemingly never-ending Brexit negotiations.
Investors Eye the UK’s Covid Response
On the technical front, the GBP/USD remains in a strong uptrend in the long-term. The pair has not had a correction move since the uptrend began at the end of September and buying momentum took the pair to recent highs. In the short-term, the week so far is bound to produce a second straight day of losses unless traders can lift the pair to a closing price above 1.3692.
The British pound is trading mixed across the board on Thursday. The GBP/AUD remains in positive territory as the European session unfolds, while the GBP/JPY is keeping flat on the day. GBP/CHF is also largely unchanged, while GBP/NZD points higher.
On the calendar, no significant events are scheduled until the end of the week. Traders and investors, however, continue to monitor the UK’s response to the Covid situation as the vaccination program remains on track. On the other end, market participants hope to receive fresh news related to the US stimulus package of $1.9tn proposed by President Joe Biden.
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