GBP/USD prediction after the latest UK lockdown news

By:
on Dec 22, 2021
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  • The GBP/USD rose after the new development on Omicron.
  • A report by the UK showed that the new variant has mild symptoms.
  • Focus shifts to the upcoming US consumer confidence data.

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The GBP/USD tilted higher on Wednesday as investors reflected on the relatively weak UK GDP numbers. The pair also rose as the market reacted to the latest information about the Omicron variant. It is trading at 1.3300, which is above the key support at 1.3195. 

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Omicron is mild

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The biggest worry in the financial market is the Omicron variant. Recent studies showed that the variant was spreading faster than Delta and the original variant of Covid-19. However, a report by the UK confirmed that the disease was relatively milder than the other variants. This report came a day after the UK confirmed more than 90,000 infections.

The GBP/USD pair also rose after Boris Johnson hinted that the country will not move into a lockdown in the coming days. He urged the public to continue wearing masks in public and for most people to start working from home. Still, he warned that the country could move to a lockdown early in 2022.

Meanwhile, data published on Wednesday showed that the UK economy expanded by 1.1% in the third quarter. This was a smaller number than the median estimate of 1.3%. It was also substantially lower than the second-quarter expansion of 5.4%. On a year-on-year basis, the country’s economy expanded by 6.8%. 

These numbers came a week after the Bank of England (BOE) delivered its interest rate decision. The bank surprised the market by hiking interest rates by about 0.25%. It also hinted that it will implement more hikes in the coming year. 

Later on Wednesday, the GBP/USD pair will react to the latest US consumer confidence data. Economists expect the data to show that confidence rose slightly from 109.5 to 110 in December.

GBP/USD forecast

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GBP/USD

The four-hour chart shows that the GBPUSD pair formed a key support at about 1.3195. It struggled moving below this level several times recently. The pair has managed to bounce back and is currently trading at more than 1.3315. It moved above the 25-day and 50-day moving averages. It also moved slightly below the 23.6% Fibonacci retracement level.

Therefore, the pair will likely keep rising as bulls target the 38.2% Fibonacci retracement level at 1.3450. This view will be invalidated if it manages to move below 1.3250.

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