16.02.202111:09 Forex Analysis & Reviews: GBP/USD: The pound needs to consolidate to further reach new highs

The start of the week favored the pound – it surprised the market with strong growth at the night of February 15 (Monday). As Tuesday began, the pound maintains an upward trend, although experts record fluctuations in its dynamics.

This morning, the GBP/USD pair was trading in the 1.3933-1.3934 range. It is now moving up to 1.3940. However, analysts are worried that the pound will start declining, which had a good start the day before. It should be recalled that the British currency gained 0.42%, reaching the level of 1.3910 in the GBP/USD pair on Monday. This is the first time that it rose in three years, who strives to reach new peaks.

According to experts, the coveted round level of 1.4000 will be reached by the GBP soon. Currency strategists at ING bank expect the pound to strengthen against the US dollar not only to this level, but also higher. This is because the British currency managed to take advantage of the chance that arose amid the weakening US currency. Analysts believe that the GBP has won the currency race against other global means of payment.

The pound, as well as other risky assets, benefit from the long-term weakness of the US dollar. On Tuesday, demand for risk assets remains strong, which supports the GBP. The threat to the dollar is still posed by the implementation of the US President Joe Biden's anti-crisis program worth $ 1.9 trillion. According to experts, the adoption of the new stimulus package in the United States will negatively affect the further dynamics of the dollar.

At the same time, the pound is strongly supported by the possible early lifting of the nationwide lockdown amid widespread vaccination against COVID-19. This encouraged the market in terms of a fairly rapid recovery of the British economy compared to the European one. For the UK government, their priority is to maintain and increase the number of jobs amid the COVID-19 pandemic. According to competent sources, the next round of economic support is scheduled for March 3, 2021.

The Brexit issue remained a heavy burden for the pound for a long time, but the UK-EU deal eased that pressure. In view of positive changes, the pound sterling is trying to ascend to new highs. The Bank of England's refusal to introduce a negative interest rate helped strengthen the position of the British currency, although the probability of implementing this initiative remains.

Many traders and investors believe that the GBP/USD pair has a growth potential above 1.4000. The majority of market participants believe in the" bullish " prospects of the British currency. They are not afraid to open long positions on the pound, although we cannot still rule out its possible decline.