GBPUSD continues to be supported by lowering negative interest bets

Mohammed Abdelkhalik
January 14, 2021

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GBPUSD Outlook: 14th January 2021

GBPUSD got new support on Thursday morning, although confidence in the fundamentals of the UK economy is still noticeably fragile, the vaccine hopes continued to provide important relief about the outlook. The loose policies of the Federal Reserve and the European Central Bank will provide net support for the Pound Sterling.

According to some reputed online forex brokers, GBPUSD is trading above $ 1.2650, a break above $ 1.3700 could lead to further buying in the near term.

While the upside remains intact now that concerns about negative interest rates have begun to subside, and some of the lusters of Brexit has faded, the EU and the UK still need to agree on “fiscal parity”.

Chart of GBPUSD - 14th January 2021

GBPUSD rose after hopes for vaccines offset fears of the Coronavirus

The UK recorded its worst daily number of deaths, with more than 1,500 deaths recorded for the day, although there was some calm due to the vaccination program with a further slowdown in the rate of new daily infections.

Analysts say the UK is pushing ahead with vaccines, so this may change the narrative of poor economic performance in the UK a little bit, and vaccine developments are expected to provide a respite and relative calm in the UK, while economic uncertainty and political discord are likely to lead to Make the British Pound weak in the coming months.

The housing sector is starting to slow down

The RICS home price index fell marginally to + 65% for December from + 66% previously, although above expectations at + 61% and still close to record highs, in contrast, new buyers’ inquiries fell to a seven-month low. Down + 15% from + 26% in the previous month.

This indicates that although the housing market remains open for business in the midst of the recent national shutdown, there is a feeling that the new restrictions will continue to affect transaction activity over the coming period.

Bank of America said that the pound was underperforming during the dollar sell-off from November, and this clearly reflects the risks of Brexit during last-minute negotiations towards the end of 2020.

Market attention has focused more on the comments coming from the Fed, in addition to Biden’s awaited speech later in the day. Fed Vice President Richard Clarida stated that the Bank will not raise interest rates until inflation exceeds 2.0% for a period of at least 12 months. Comments are from market speculation about tightening as US yields decline.

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.