GBP/USD Price Positive Around 1.3450 amid Brexit, Covid Optimism

• After renewing its multi-day high, GBP/USD has been hovering.
• A reduction in the number of virus cases in the UK and the government’s commitment not to impose new restrictions in 2021 were favored by the police.
• New post-Brexit fisheries regulations and the announcement of £75m in funding for UK ports and processing plants added optimism.

During Tuesday’s first inactive Asian session, the GBP/USD price began to round off to its recently hit 1-month high of 1.3440.

Bullish market sentiment and positive domestic news propelled cable pair prices to multi-day highs. However, the Christmas season toward the end of the year limited the quote’s reaction to a positive one.

On Monday, the UK reported 98,515 cases of Covid infection after several days of over 100,000 cases. Besides weakening COVID-19 indicators, Sajid Javid, the British Minister of Health, also expressed his support for the GBP/USD exchange rate. In England, the UK government will not impose any new restrictions on COVID-19 until the end of 2021, said UK Health Minister Sajid Javid. Authorities in the UK have also said that “temporary” restrictions on isolation may last until the end of March.

The UK announced a £75 million package of aid to improve ports and processing facilities and create jobs. According to the latest fisheries regulation, 70% of the British crew and 70% of the fish must land at UK ports.

Studies in South Africa and the UK, which show lower hospitalization rates with the Covid Omicron variant, have eased market concerns about the South African Covid variant. In a positive development, US Vice President Kamala Harris announced that she would accept President Joe Biden’s Build Back Better (BBB) incentive plan. In addition, the ongoing negotiations on the denuclearization of Iran and the global search for peace between Russia and Ukraine seem to have benefited GBP/USD buyers as well.

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GBP/USD price technical analysis: Bulls vs. bears

As it picks up supply around 1.3430, down 0.10% from the day it opened in London on Tuesday, the GBP/USD formation of bearish candles is justified.

Before falling below 1.3448, the cable pair renewed its five-week high the previous day. A bearish Doji Evening Star candlestick formed simultaneously as a rising wedge pattern near a multi-day high.

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For a theoretical move south, a break at 1.3415 will be evident, to reach 1.3170 as the annual low. The 200 SMA around 1.3325 may act as a buffer in the fall.

To reject bearish signals, a corrective pullback should not only bounce off an intraday high above 1.3445 but also cross the top line of the wedge at 0.3470.

The GBP/USD bulls target the highs reached on November 18 and 9, at 1.3515 and 1.3610, respectively.