The GBP/USD price is hovering near its highest level in three years as investors cheer the UK vaccination progress. The pair is trading at 1.4015, which is 22% above the lowest level in 2020.
What happened: The GBP/USD has been in a strong uptrend recently as investors react to the relatively weak US dollar, Brexit deal, and the vaccination progress. The greenback has already lost 12% of its value against a basket of currencies since March last year.
At the same time, the UK government has already vaccinated more than 15 million people and is on track to become the first country to vaccinate the total population. In a note, an analyst at ING said:
“If you compare the exponential pace of the vaccine rollout in the U.K. and the U.S. compared with the rest of Europe, that’s giving investors confidence in a second-quarter recovery.”
Further, recent data shows that the UK economy is recovering. On Friday, data by Markit showed that the manufacturing and services PMIs have started rising amid the lockdowns.
GBP/USD technical forecast
The four-hour chart shows that the GBP to USD price has been in a strong upward trend recently. It crossed the important psychological level of 1.400 last week and is in a consolidation mode. The price is also close to the upper side of the ascending channel.
Therefore, in my view, while the bullish trend will continue, there is a possibility of a small pullback happening. If it does, the price will likely retest the support at 1.3950. However, a move above 1.4050 will signal that there are still buyers in the market.
GBP to USD chart