The old market adage 'the trend is your friend' is supporting sterling at present, but that could dramatically change if there are any significant problems with Britain's coronavirus vaccine rollout.
The UK's successful initial rollout of vaccines nS8N2HX042, while the European Union and U.S. remain a work in progress, is behind the current sterling strength. President Joe Biden is working hard to improve the U.S. programme nL1N2K12BJ, while the EU has vaccine supply issues nL8N2K16B9.
Sterling is trending north despite Britain's poor performance in managing the coronavirus, with record deaths and worse expected nL8N2K15MK, combined with significant teething troubles for UK manufacturers trading with the EU nL1N2K111I.
The dollar remains significant for GBP/USD, but sterling is resilient when the USD bounces and rises easily if the USD slips, which is a recipe for further gains.
GBP/USD had a bullish outside day on Tuesday and EUR/GBP a bearish one, reinforcing sterling's positive technical outlook. GBP/USD shows 5, 10 and 21 daily, weekly and monthly moving averages heading north, which is a strong trending setup, with blue sky until 1.4303, 50% of the 2014-2020 fall.
A close below the rising 1.3631 21 DMA would suggest consolidation, while the 1.3451 2021 low is pivotal support.
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