GBP/USD to move back below 1.40 if bulls book some profits – DBS Bank

The GBP/USD pair is eyeing 1.41 but pandemic headwinds in the UK could push the cable below 1.40 again if bulls book some profits, economists at DBS Bank apprise.

Key quotes

“At this level, GBP appears overbought. Apart from a Relative Strength Index reading around 74, GBP is around the top of an ascending price channel established after the November US elections.” 

“While UK research showed that the vaccines sharply reduced hospitalisation and transmissions, Prime Minister Boris Johnson has decided to go slow on easing lockdowns which will be carried out in four stages between 8 March and 21 June.” 

“Chancellor of the Exchequer Rishi Sunak will be presenting his budget on 3 March. He is reportedly looking to hike the corporate tax rate every year by a percentage point to 23% by the general elections in 2024 from its present 19%.” 

“With the UK economy slow to emerge from the pandemic in 1H21, GBP could return below 1.40 again if the bulls decide to book some profits.”