GBP/USD set to rally after upbeat UK growth numbers

GBP/USD has been declining as US yields are on the rise. Quarterly GDP for the UK grew 1% in Q4 vs. 0.5% expected and the cable has responded with a "buy the rumor, sell the fact.” The pair is now ready to rally to new highs, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“The UK has reported a Gross Domestic Product growth rate of 1.2% in the fourth quarter of 2020, beating economists' consensus, but meeting elevated expectations created by the Bank of England. Given the BoE's comments, GBP/USD has responded with a ‘buy the rumor, sell the fact’ response – shrugging off the encouraging GDP figures. Nevertheless, it remains well-positioned to rally.” 

“House Democrats continue drafting the bill in the background. Without new details – potentially about agreeing for a more generous stimulus – bonds will likely remain bid. In turn, that implies lower yields and pressure on the greenback.” 

“Some resistance awaits at 1.3820, which supported cable when it traded on higher ground earlier in the day. It is followed by 1.3865, the fresh 2021 peak. Further above, 1.39 and 1.40 await the cable.”

“Support awaits at 1.3785, the daily low, followed by 1.3750, which was a stubborn cap earlier in January. Further down, 1.3680 and 1.3615 await pound/dollar bears.”