GBP/USD: The Good Is Likely To Beat The Bad And The Ugly, Bullish Breakout Eyed

More upside than downside – but is it sufficient to break above 1.34? Monday’s upside move failed to break that round level, but sterling has another chance. There are several moving parts that can be categorized into The Good, The Bad, and The Ugly.

The good – Three factors

Vaccine: AstraZeneca and the University of Oxford published promising results from their Phase 3 coronavirus vaccine trial. While the different dosage figures caused some confusion, markets are more optimistic now and await the final figures. The British-grown immunization scheme is the third out of three vaccines and emergency authorization is likely in the UK as early as next week.

Transition: President-elect Joe Biden will be able to begin his transition after outgoing PResident Donald Trump gave the green light to the move. The authorization removes political tensions and would allow for better control of the pandemic and the economy. The safe-haven dollar dropped in response to the news.

Janet Yellen, the highly regarded former Federal Reserve Chair, will likely be America’s next Treasury Secretary. Her probable nomination has also been cheered by markets as she would support fiscal stimulus yet without endangering free trade.

The bad  two adverse developments for GBP/USD

London lockdown? UK Prime Minister Boris Johnson announced the end of the nationwide lockdown in December but the localized tier system will likely be stricter than the previous one. Moreover, it is still unclear if London, one of the world’s financial capitals, will be under severe restrictions.

The UK’s case curve is falling, yet mortalities remain elevated.

Dollar reacts to data: The second adverse factor for cable stems from encouraging US figures – Markit’s Purchasing Managers’ |Indexes beat estimates and pointed to strong growth in November. The US dollar shot higher in a surprising reaction to usually second-tier figures.

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