After years of political vitriol and turmoil, the cable bolstered to a nine-months high reaching on 31st December 2020 at $1.3703 when the United Kingdom clinched a last-minute Brexit trade deal agreement, printing rules for fishing and agriculture.
The frenzied gyrations of the Brexit crisis dominated European affairs for the last five years, with Sterling sinking to $1.1450 2016 low, haunted the sterling markets and tarnished the United Kingdom’s reputation as a confident pillar of Western economic and political stability.
The cable now wrestles idiosyncratically with Covid-19 vaccine optimism and Brexit divorce treaty hope on the front foot, vis-à-vis speculation of Bank of England rate cut, third lockdown conundrums and an escalating economic malaise.
GBP/USD could lure in dichotomous ways after the United Kingdom ended de facto membership to the European Union last Thursday. Recent price action raises the scope for a larger bullish bias to $1.60 as the pair emanates a fifth wave extension as per Elliott Wave lexicon.
Bulls have far remained very responsive since March 2020. If the pair remains above Wave (4) at $1.3187, impulse Wave (5) formation above support at $1.3703 could be anticipated with little fanfare, with target neighbouring zone $1.4590 to $1.5456.
Failure to propel above support at $1.2672 of 23rd September 2020 low will catalyse a jolting collapse and invalidate the technical analysis count. The trendline stemming from March 2020 on the daily chart would likely come into play as support on a move lower.
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