The English monetary unit resembles the movement of a tank. It rides off-road, crushing its rivals harshly and mercilessly and advancing. From time to time the tank moves out onto the tarmac and speeds up.
This is exactly what we see in the chart above. Incidentally, it shows a rising channel, which has not changed a bit since our last review of sterling, issued some 10 days ago.
As we have been drawing the attention of our subscribers, the British currency continues to appreciate. And on Wednesday, it accelerated to the point where it even broke the upper boundary of the channel. As we know from technical analysis, such a break-up is false in most of the cases (unlike the channel’s lower boundary). But even such false breakthrough only confirms the force of the market trend.
New inputs for the pound and the UK economy have emerged
The UK Prime Minister has proposed a plan to lift restrictions over COVID-19. It consists of four stages. All restrictions are planned to be lifted by the end of June, if the situation allows it.
That is, the majority of people in Foggy Albion will be vaccinated or have antibodies as early as summer. It was in the background of this news that the British currency accelerated its growth earlier this week.
And of course in Europe the situation with mass vaccination does not look so optimistic. The best proof of this is the chart of EUR/USD, which we urge everybody to watch again, on the timeframe D1.
Our forecast remains the same. In 2021, we should see a breakdown of the 1.50 level in the Pound/Dollar pair.
11.00 EU Business Climate Index for February
14.30 US Annual Q4 GDP data
14.30 US initial jobless claims weekly
14.30 US Durable Goods Orders for January
Important Notes on This Publication:
The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.