GBP/USD Set To Extend Gains As Brexit, Vaccines And BoE Are All Pound-positive

  • GBP/USD has been rising as the safe-haven dollar retreats from its highs.
  • Optimism about the NI protocol, Britain’s vaccine milestone and bullish BOE comments may boost sterling. 
  • Monday’s four-hour chart is pointing to more gains for cable.

Money, Finance, Financial, Dollar, Pound

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Another day, another scandal for UK Prime Minister Boris Johnson, who allegedly said he would prefer seeing bodies pile up than impose a new lockdown – a claim Downing Street strongly denies. For sterling, Johnson’s Brexit actions matter more and they are pound-positive (FXB, UDN).

The EU and the UK are reportedly negotiating a quid pro quo deal on dealing with trade in Northern Ireland. Brussels has made new offers to London, potentially allowing for a breakthrough that could resolve issues and allow for more fluid commerce. While COVID-19 is the overwhelming economic issue, leftovers from Brexit remain a drag on the British economy and any progress could add another boost.

Sterling benefited from Britain’s rapid immunization effort, which hit a significant milestone – over 50% of the population received at least one jab. This headline, alongside the ongoing fall in cases, is helping the pound despite worries about India’s out-of-control COVID situation. The UK, the US and other countries have offered aid – also of self-interest, as falling demand from Asia could hurt the global recovery.

Another reason to be bullish on the pound comes from the Bank of England. Deputy Governor Ben Broadbent said that he sees “very rapid” growth at least during the next couple of quarters. Will Britain’s bounce-back match America’s?

US Durable Goods Orders figures for March are due out on Monday, and economists expect a substantial increase of 2.5% after a fall in February. However, after the world’s largest economy’s statistics beat estimates in other releases, a faster growth rate cannot be ruled out. The publication feeds into Thursday’s Gross Domestic Product data and is also watched by the Federal Reserve.

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