GBP/USD: Three signs pointing to a sterling rally

GBP/USD has been trading around 1.36 as tensions grow toward US Nonfarm Payrolls. Things may turn in favor of the currency pair as optimism about vaccine approval and deployment may boost the pound, Yohay Elam, an Analyst at FXStreet, reports.

See – Nonfarm Payrolls Preview: Forecast from five major banks for December jobs report

Key quotes

“Britain is ramping up its efforts to beat the virus. Regulators are set to approve Moderna's vaccine, bringing the total number of immunization schemes deployed in the UK top three. Another shot in the arm comes from concerted efforts by the government to speed up the distribution of jabs across the county.”

“Bond-buying by the Federal Reserve can bring yields down and make the dollar less attractive and that could happen if economic data deteriorates. The Nonfarm Payrolls report for December is set to show a notable slowdown in hiring – and perhaps a loss of jobs. Any disappointment could prompt action from the Fed, which already expressed its readiness to act.”

“Momentum on the 4-hour chart has turned positive for GBP/USD – which has also been able to recapture the 50 Simple Moving Average it had lost on Thursday. Some resistance awaits at 1.3620, the mid-December high, followed by 1.3676, the 2021 high.

Support awaits at 1.3630, the daily low, followed by 1.3480 and 1.3445.”