GBP/USD Reverses Its Mid-Week Course
Shain Vernier • 2 min read
It has been an active week for the U.S. dollar as forex players price in expectations for the coming month. Today, the Greenback is turning in a mixed performance vs the majors. The big movers and shakers are the EUR/USD (-0.17%), GBP/USD (+0.12%), and the USD/JPY (+0.25%). For the GBP/USD, bidders have stepped in and extended Tuesday’s gains.
On the news front, two key stories progressed during the U.S. overnight session. Here’s a quick look at each:
- COVID-19 Vaccines: In a statement yesterday, POTUS Joe Biden announced a blockbuster deal between Merck and Johnson & Johnson to boost COVID-19 vaccine production. Now, Biden projects that every U.S. citizen will have access to the vaccine by the end of May.
- Stimulus: Over the past 24 hours, it appears as though the new $1.9 trillion COVID-19 stimulus plan will gain Senatorial approval. Senate majority leader Chuck Schumer stated that the Senate will take up the COVID-19 relief package “as early as tonight.”
All in all, these two issues have brought some clarity to the markets. More stimulus looks to be fast-tracked, as is vaccine distribution. Although both of these issues are expected, they will still contribute to positive sentiment when actually executed.
For the USD, the news has brought two-way participation, with the GBP/USD driving higher.
The Bullish Trend In The GBP/USD Is Alive And Well
Last week brought frantic action to the GBP/USD as values spiked to 1.4236 before pulling back. Since that time, the bears have ruled the roost, driving rates below the 1.4000 handle.
Here are two levels to keep an eye on for the near future:
- Resistance(1): Spike High, 1.4236
- Support(1): 62% Current Wave, 1.3822
Bottom Line: Currently, the long-term bullish trend in the GBP/USD is intact. If we see this pair retrace, a long trade may set up nicely. Until elected, I’ll have buy orders in the queue from 1.3827. With an initial stop loss at 1.3794, this trade produces 33 pips on a standard 1:1 risk vs reward ratio.