12.04.202114:32 Forex Analysis & Reviews: British pound may regain its attractiveness

Participants of financial markets became disappointed. This sentiment significantly affected most assets. At the beginning of April, the pound sterling also lost its attractiveness. Speculators, encouraged by the idea of a rapid vaccination program, pushed bullish positions to the highest levels among the G10 currencies. Hedge funds began closing their positions amid the news about a shortage of doses.

In the UK, the number of adults who received their doses is significantly bigger than in other countries. However, only 11.2% of UK citizens got both jabs. At the same time, in the US, 55.4% received first doses and 21.5% got two injections. In the European Union, only 21% have passed the first stage of vaccination and 6% received their second jab. The EU is well behind other countries. However, in the second quarter it received 360 million doses compared to 107 million doses in the first quarter. As we know, markets grow amid expectations. That is why hopes for a faster vaccination campaign may boost the euro/dollar and the euro/pound pairs.

A conflict between London and Brussels over the vaccines only intensifies positions of Brexit supporters. According to the polls conducted by JL Partners for Bloomberg, 67% respondents said that the EU behaves as a rival, and only 13% suppose that the EU is an ally. In particular, residents of Northern Ireland believe that London treats them differently in comparison to other parts of the United Kingdom. Notably, British exporters are also suffering because of Brexit. Growing number of them report worse financial results than last year. However, Boris Johnson's government calls this "teething".

Despite the fact that bulls of the pound/dollar pair are disappointed by their trade results, by the middle of the month, the situation may change. Notably, traders were opening positions amid hopes for a fast and effective vaccination campaign during the week that ended on April 9. The UK economy is gradually opening, allowing the IMF to increase its forecast of the country's GDP in 2021.

The IMF forecasts of GDP in the world's largest economies

Bulls of the pound/dollar pair may receive support from strong macroeconomic data from the US and encouraging corporate reports from US companies. The country may act as the global economy's locomotive in the next few years. The confident rally of S&P 500 proves a high appetite to risk and puts pressure on safe-haven assets, including the US dollar. Notably, in 2021, the index has already advanced by 10% and reached its all-time high 20 times.

From the technical point of view, on the pound/dollar pair's chart, we still can see the Wolf Waves pattern. However, at first, the pair should rise above 1.391. Moreover, the Expanding wedge pattern is forming on the chart. There are 4 from 5 points already. At the same time, if the pound sterling advances above the highest level of the candlestick №2 (1.378), aggressive traders may open long positions.

GBP/USD, daily chart