GBP/USD trims intraday losses around mid-1.3800s even as EU-UK vaccine jitters mount
- GBP/USD picks up bids following its bounce off 1.3817.
- EU prepares to block AstraZeneca exports to Britain despite hesitant acceptance of vaccine in the bloc.
- UK Chancellor Sunak is up for delaying online sales tax hike, London sets a new record of jabbing.
- Fedspeak, vaccine news can entertain traders amid a light calendar.
GBP/USD holds onto recovery gains from intraday low to currently around 1.3850, down 0.16% on a day, while heading into the London open on Monday. In doing so, the cable trims early Asian losses as the US dollar eases. However, fears of the coronavirus (COVID-19) vaccine tussles between the European Union (EU) and the UK, coupled with covid resurgence challenge the quote.
As the UK marks the third consecutive day of record vaccinations, per Sky News, with 27 jabs a second benchmark, its ex-neighbor envies the success and stays ready to block the AstraZeneca vaccine produced in the Netherlands citing the local need. “The Brits are insisting that the Halix plant in the Netherlands must deliver the drug substance produced there to them. That doesn't work.” Reuters quoted the EU official.
On the different page, The Guardian spots a halt in Britain’s infection rate while also saying, “Admissions to hospital and daily deaths from the disease continue to decline with numbers in the latter category now down to double digits while the former has dropped to around a 10th of their total two months ago.”
As the recent unlock measures were spotted for the virus resurgence fears, UK PM Boris Johnson's eyes to keep the lockdown measures, even with receding control, until next October. Alternatively, UK Chancellor Rishi Sunak is up for delaying the decision on British online sales tax considering, per the Financial Times, President Joe Biden’s US administration reveals whether it will support efforts to reform global digital tax rules being led by the Organisation for Economic Co-operation and Development (OECD).
Talking about the other side, US Federal Reserve showed readiness to end the Supplementary Leverage Ratio (SLR) concession by the expiry of March-end. The news joined covid dears and upbeat Treasury yields to favor the risk-off mood. Also on the risk-negative side could be Germany’s decision to extend lockdown to April.
Against this backdrop, S&P 500 Futures struggle for a clear direction following two consecutive days of losses whereas the US 10-year Treasury yields drop 5.5 basis points (bps) to 1.677% by the press time.
Looking forward, any further escalation in the EU-UK vaccine tussle could weigh on the GBP/USD. Also on the negative side are the likely upbeat comments from the Fed policymakers, up for speaking amid late Monday. It should, however, be noted that Britain’s vaccine success and the BOE’s rejection to the reflation fears, despite record debt, may restrict the sterling’s losses.
Technical analysis
GBP/USD flirts with the key 1.3820 support confluence, comprising an ascending trend line from March 05 as well as 61.8% Fibonacci retracement of the pair’s rise during the previous month. However, downbeat MACD and failures to cross the 1.4000 threshold during the last week, not to forget the recently bearish fundamentals, favor short-term cable sellers.