July 8 2021
The GBP has been a recent victim of the safe-haven buying of both US Dollars and the Japanese Yen.
The market is worried about the reopening of the UK economy. The ONS has said that 9 out of 10 adults in England now have covid antibodies against the virus. So what’s the big worry.
The worry is virus variant Delta. Which is going to impact the US just as hard, if not harder, than the UK. Not to mention Japan, whose vaccination rollout has/is far from efficient.
The UK is committed to reopening its economy on the 19th of July. Although many new covid cases may arise, the hospitalisations and deaths will be a mere fraction of the previous pandemic waves. Thanks to the UK vaccination program. The UK will not lockdown again.
The market seems to be overstating the threat of variant delta in the UK. In my view, it will hit the US harder, particularly in the red states where vaccination rates are low.
Nevertheless, the immediate technical outlook is a bit depressed for a die-hard GBP Bull like me.
Support at 1.3760 was tested again and did hold. The test of support has been followed by a recovery back to 1.3810/20.
However, I am somewhat concerned that there has been no continuation buying. Just a drift lower ever since.
The Bulls (me included) want to see 1.3820/40 broken and held with a further extension of the rally towards Monday’s 1.3890 highs.
The worry for me is that there is a risk we might get another test of 1.3760/40 and even a drop to 1.3700 in the coming European and US sessions.
Never mind, football is coming home on Sunday. cable may be under a bit of pressure, but it’s nothing compared to what the Italians will face at Wembley. Come on England.
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