- GBP/EUR forecast target at 1.1532

- GBP/USD forecast target at 1.3792 in focus

- Vaccination divergence tipped to underpin upside momentum

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The British Pound is predicted to maintain positive momentum against the Euro and Dollar over the coming five days, with analysts saying the country's vaccination rollout and the nixing of negative interest rate at the Bank of England last week likely to prove supportive.

The Bank of England said Thursday that negative interest rates could not be introduced until preparations at commercial banks had been conducted, which would take another six months. But by this point the Bank expects the economy to be enduring a post-covid rebound, meaning negative interest rates are highly unlikely.

Sterling jumped as the market washed out negative interest rates from the horizon, and further gains are possible says a noted foreign exchange analyst.

Société Générale's Kit Juckes says "EUR/GBP is on track to get to 0.85 by mid-year as the risk of negative rates fades."

From a Pound-to-Euro exchange rate perspective this puts euro buyers on course to see 1.1765 by mid-year.

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"Sterling rose to its highest level since last spring against the euro following the BoE update," says Rhys Herbert, an economist at Lloyds Bank.

The vaccination programme in the UK continues to provide support, with daily data confirming the rate of vaccinations continue to accelerate which puts the UK on course to be the first major country to unlock its economy on a sustainable basis.

According to international vaccination tracking at Our World in Data, the UK has now given a first dose of vaccine to 16% of its population, the U.S. 10%, Germany 3.5%, France 2.80% and Canada 2.69%.

The divergence in vaccinations between the UK and Eurozone is particularly acute, a gap that could deliver further GBP/EUR upside according to analysts.

"The euro lost further ground to the pound... continuing the trend of earlier sessions that has seen the single currency losing more than 1% to sterling since Monday. The relative success of the UK’s vaccine rollout contrasts with the, so far, suboptimal progress of the European programme," says Ricardo Evangelista, Senior Analyst at ActivTrades.

"The slow pace of the vaccine deployment orchestrated by Brussels is triggering fears of a slower than expected economic recovery in the EU, while on the other side of the channel the picture looks rosier, with hopes that Britain may have vaccinated its entire adult population by July," he adds.

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From a technical perspective, a number of analysts we follow maintain a view that Sterling is preferred over the Pound in the near-term, while others point out that a more substantial longer-term improvement in the charts are now on display.

Peter Stoneham, a Reuters market analyst is one of those looking at a more significant and lasting shift in momentum that favours the Pound. He says there was a "significant" move higher in GBP/EUR in Thursdays and the weekly chart has sent a strong bullish signal as a result.

Stoneham notes a significant bullish signal in that the weekly chart has closed above the converged 100-200 Weekly Moving Averages:

The 100 day moving average, defining the bull trend and Thursdays move through it, meanwhile brought a sizeable advance that bodes positive.

Forecast targets are now set at 1.1532 which is the April 2020 high and the 1.1675 76.4% Fibonacci level, according to Stoneham.

GBP/USD Technical Forecast Targets

The Pound has struggled against the Dollar of lates with the daily chart showing the uptrend of 2021 has faded of late, can the bulls finally crack the glass ceiling or is a period of decline/sideways consolidation due to set in?

Paul Spirgel a Reuters market analyst says the outlook is bullish and GBP/USD has kept near its recent trend highs following Friday's U.S. jobs report which now puts more focus on efforts in Congress to craft and approve a U.S. COVID relief package, "which could temper dollar enthusiasm until the bill is closer to completion".

"A rise above 1.3759 would target the April 2018 weekly high at 1.3792 and then the upper 30-day Bollinger band at 1.3828," says Spirgel.

Fawad Razaqzada, Market Analyst at ThinkMarkets says the charts are advocating further Sterling strength:

"Going long GBP/USD is something I would consider given the Pound’s ongoing strength, especially after the Bank of England said it does not want to signal that negative rates are coming even though it would prepare for sub-zero rates if needed."

Razaqzada says the GBP/USD formed a hammer-like candle on the daily chart, suggesting the bull trend may have resumed:

Data Due this Week: GDP

The calendar this week is dominated by Thursday's release of GDP data for the final quarter of 2021.

Consensus expects the UK economy to have grown 0.5% in the final quarter of 2020, as the UK exited a national lockdown and entered a tiered approach to restrictions.

Economists at Lloyds Bank are forecasting the economy to have expanded 1.0% in December alone.

The data is however firmly in the rear-view mirror and with investors so heavily focussed on the ending of lockdown and vaccinations the market impact is likely to be marginal, if anything at all.