Is it Delta or Omicron? The answer is unknown but the increase in UK cases and upcoming restrictions have undoubtedly weighed on the pound – and now the BOE is set to react. On the other side of the pond, the Fed is set to accelerate the pace of tapering as the US economy seems to fire ton all engines. Winter is coming – to British businesses, households, and that famous address: 10 Downing Street. Prime Minister Boris Johnson is in trouble for allegations of a Christmas Party held in the PM's premises in December last year – while the entire country was in lockdown. Uncertainty about the PM's political future came as the icing on the cake for sterling bears. Even if the Fed refrains from tightening too fast and the BOE leaves a February rate hike on the table, Britain's covid and political woes could tip the scales lower, extending the bearish trend.

BULLISH AND BEAISH CONDITIONS/ POSSIBILITIES:

Pound/dollar has been extending its decline while averting oversold conditions on the daily chart. The Relative Strength Index (RSI) is holding above 30. This development means downside momentum has somewhat moderated but bears still remain in control.

The currency pair is trading in a downtrend channel since late November, setting lower highs and lower lows, almost on a daily basis.

Some support is at 1.3195, which was a swing low in late November, and it is backed up by the 2021 trough of 1.3175. Further down, 1.3110 and 1.30 await GBP/USD.

Significant resistance is only at 1.33, which capped a recent recovery attempt, but that gap between current prices and that high bar do not help cable recover. Further above, 1.3350 cushioned GBP/USD in November and now works as resistance. The 1.34 line separated ranges and remains strong.

Will GBPUSD be able to Break above 1.3300?

Dec 12 2021

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