GBPUSD is trading near its highest level in three years

Mohammed Abdelkhalik
February 1, 2021

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GBP/USD Outlook: 1st February 2021

GBPUSD traded near three-year highs in the European market trading on Monday morning, driven by a combination of increased investor appetite for risk and growing optimism about the launch and distribution of the vaccine in the UK.

Riskier currencies observed gains against the dollar, and the sterling pound was one of the most supportive of the riskier currencies, with the rising global market sentiment as it occurred due to rising stocks in the Asian session.

After the dispute between Britain and the European Union over vaccine supplies, EU officials said on Saturday it was a mistake to turn to emergency Brexit powers in Northern Ireland.

While the United Kingdom said that it expects supplies of Coronavirus vaccines not to stop, nearly 9 million people in Britain have received their first dose of the vaccine according to official data showed yesterday.

Chart of GBPUSD - 1st February 2021

GBPUSD traded at $ 1.3758, up by 0.2%, near the three-year high at $ 1.3759, which it hit on Wednesday last week, while the pound rose by 0.5% to trade at 88.14 pence per euro, after it reached its highest level since May 2020 earlier in today’s session.

GBPUSD is rising ahead of the BoE meeting

The focus is on the Bank of England meeting to be held on Thursday this week, as the bank is likely to discuss negative interest rates and what they mean for banks and the UK economy.

Most of the expectations indicate that the main motives for the bank’s further accommodative policy have retreated significantly, as a result of the last-minute agreement with the European Union, which included the safe separation of Britain, in addition to the flexibility of the British economy at the end of last year, and the relatively rapid distribution of Covid-19 vaccines in the United Kingdom.

Nevertheless, the third shutdowns that the government adopted and implemented strictly are likely to negatively affect the country’s economic growth at the beginning of the year.

If the results of the British Central Bank meeting came in line with expectations, this will give the British pound a strong boost, as it will strongly limit the negative interest rate forecast in the near term.

The US dollar stumbles as stocks advance

The dollar fell as global stock markets rose on Monday, while riskier currencies such as the British pound, Australian dollar, and New Zealand dollar rose. The US currency fell against most of its peers as Asian and European stocks rose after four days of losses.

Earlier, the dollar found support as investors remained concerned that the retail investors who did regulation might continue their assault on short positions in hedge funds, which led to more volatility.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.