GBP/USD Smashes Resistance After Shot In The Arm, Hurdles Remain

Circling back to coronavirus, its spread is far from over. British COVID statistics have stabilized but are yet to bend lower. The current nationwide lockdown expires on December 2 and the government is set to return to a localized approach. However, the new tiers may include relatively robust restrictions.

Markit’s preliminary Purchasing Managers’ Indexes are set to decline amid the shuttering, yet remain above 50, reflecting growth. Later in the day, US PMIs are forecast to edge lower as well.

The focus in America remains on the virus, with a new peak of hospitalizations above 83,000. The mortality curve is also on the rise. On the political front, President-elect Joe Biden may announce his pick for Treasury Secretary on Tuesday. President Donald Trump has failed in his attempts to overturn the election results and is coming under growing pressure to allow a smooth transition.

Overall, the focus is on the UK, with reasons to be cheerful, yet hurdles remain.

GBP/USD Technical Analysis

Pound/dollar is benefiting from upside momentum on the four-hour chart and is trading above the uptrend support line that has been accompanying it from early November. It is also holding above the 50, 100 and 200 Simple Moving Averages (FXB, UDN).

However, the Relative Strength Index is on the verge of surpassing the 70 level – entering overbought territory.

Some resistance is at the daily high of 1.3360, followed by 1.3420 and 1.3510 seen in the summer.

Support awaits at the previous resistance line of 1.3310, see in mid-November. It is followed by 1.3280, which held the currency pair on its way up. The next levels to watch are 1.3195 and 1.3150.

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