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Jan 20 - 11:55 AM

GBP/USD - COMMENT-Sterling Retreats From Latest 2-1/2-Year High Above 1.37, Again

By Paul Spirgel  —  Jan 20 - 10:39 AM

Sterling retreated from the 2-1/2-month high of 1.3720 it hit in the wake of unexpectedly strong UK inflation data earlier on Wednesday nL8N2JU4UL, with pound bulls remaining emboldened despite the familiar pullback from its latest peak.

GBP/USD fell back to 1.3670 in early U.S. trade from the peak of 1.3720 it hit in European trade.

GBP bulls remain emboldened by reduced anxiety over UK negative rates.
Tho
ugh short sterling futures 0#FSS: still factor in sub-zero rates in mid-2021, BOEWATCH on Eikon indicates the BoE will keep rates steady at its Feb 4 meeting.

Additionally, COVID lockdown-related growth fears are being shrugged off as the UK vaccine program progresses.

Despite recent GBP/USD strength, the pound has failed above 1.37 in four of 13 trading session in 2021.
GBP/USD remains caught between the rising upper 30-day Bolli currently at 1.3759 and 30-DMA by 1.3531.

A break above Wednesday's high at 1.3720 and upper 30-day Bolli resistance at 1.3759 would put the May 4 2018 high at 1.3792 and other early 2018 highs up to 1.4377 in sharper focus.

However, should bearish UK growth or dour COVID developments re-emerge sterling bulls may quickly unwind recent longs 1096742NNET, leading sterling to retrace some of its 6.75% gains from Nov. 2 lows by 1.2852.
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Source:
Refinitiv IFR Research/Market Commentary

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