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GBP / USD pair is under pressure after tightening quarantine in London

News of tougher quarantine measures put pressure on the GBP / USD pair on Monday afternoon. Today the British pound sterling is still unable to recover these positions.

UK Health Minister Matthew Hancock stated yesterday that London's hospitals are overcrowded and the city needs to tighten quarantine measures. New restrictions will be introduced from Wednesday.

 

It’s important to note that last week, the UK launched a large-scale vaccination program for the population. The country's authorities hope that this program will reduce the number of cases of COVID-19 and help bring the situation with the virus under control. But it is obvious that the effect of the vaccination program will appear no earlier than at the beginning of 2021.

 

Uncertainty related to Brexit continues to put pressure on the British currency. Recently the chief negotiator of the European Union on Brexit Michel Barnier said that a trade agreement with the UK is still possible, the deal can be reached in just a few days. But at the same time, both sides so far note the lack of progress in the negotiations.

S&P Global Ratings predicts a freeze in the UK economic recovery for a long time, in the event of a hard Brexit scenario. The agency does not exclude a strong decrease in the country's sovereign credit rating.

 

On the chart, buyers are holding the price above 1.3285 for now, maintaining good chances for renewed upward movement. But overall, the situation remains very precarious. In case of a breakdown of the support at 1.3285, the currency pair may drop to 1.3215.

 

  • Resistance levels: 1.3460, 1.3500, 1.3600;

 

  • Support levels: 1.3285, 1.3215, 1.3110.

 

The main scenario is growth to 1.3460.

 

An alternative scenario is a breakdown of the support at 1.3285 and a decline to 1.3215.

 

The current fundamental outlook is moderately negative. We consider longs with very moderate risks from the level of 1.3285.

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