GBP/USD: Hopes that Brexit accord is near to boost the pound

GBP/USD has dropped off the highs amid reports that a Brexit deal is delayed but hopes for an accord and Britain's vaccine advantage put the pound in pole position to gain ground, Yohay Elam, an Analyst at FXStreet reports. 

Key quotes

“GBP/USD has tumbled from the highs just above 1.33 in response to a report suggesting the November 15 target date is likely to be missed. However, EU and UK negotiators may still seal a deal sometime next week. Most importantly, the only critical deadline is December 31 – when the transition period expires. While there are open issues, Brussels and London have been able to blur some of their red lines on sensitive topics such as fisheries and state aid.”

“While the entire world is set to benefit from immunization, Britain is one of the countries best-positioned. Apart from signing an agreement with Pfizer – which together BioNTech announced efficacy of 90% in its preliminary results – its homegrown vaccine project is set for success as well. AstraZeneca and the University of Oxford are using the same mRNA approach to develop their inoculation and may also publish encouraging results in the next few weeks. Moreover, the UK has a detailed priority plan of who will get the vaccine first.”

“The cable continues benefiting from upside momentum on the 4-hour chart but the Relative Strength Index is around 70 – touching overbought conditions. This setup suggests a potential struggle a more cautious move to the upside. Resistance is at the new high of 1.3310, followed by 1.3360 and 1.3420, levels last seen in the summer. Support is at the daily low of 1.3240, followed by 1.3205, which was a temporary cap on Monday.”