- GBP / USD is appreciating for the fourth day in a row and is approaching 1.3400.
- The pound ignores the historic budget deficit and bleak economic outlook.
- GBP / USD is still targeting 1.3400 and above – UOB.
The pound sterling it continues to trade strongly and appreciated for the fourth day in a row on Wednesday, extending its bounce from last week’s lows at 1.3100 to session highs a handful of pips below 1.3400.
The pound has been unfazed by the UK’s record lending plan, nor by the bleak economic outlook described by Finance Minister Rishi Sunak on Wednesday and has maintained its positive trend against the US dollar to test 12-week highs at 1.3395.
The Finance Minister has announced a plan to borrow £ 400 billion to offset the devastating economic impact of the COVID-19 pandemic. This will be the largest budget deficit in peacetime. Beyond that, Sunak revealed that the UK economy will contract at a rate of 11.3% in 2020, the biggest economic decline in 300 years, to recoup just half of that loss in 2021.
Cable remains backed by hopes that a COVID-19 vaccine could be available early next year and investor confidence in a Brexit deal before the end of the transition period on December 31.
GBP / USD heading towards 13400 and above – UOB
From a technical standpoint, the UOB currency analysis team sees the pair heading higher and above 1.3200: “The underlying tone has strengthened a bit and we see a possibility of the British pound rising to 1.3400. At this stage, the prospect of a sustained advance above this level is not high (next resistance is at 1.3440). Support is at 1.3335 followed by 1.3300 “.
Technical levels
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