GBP/USD: Looks to regain 1.3900 as US dollar bounce battles UK’s covid passport, Brexit news
- GBP/USD snaps two-day uptrend, bounces off intraday low.
- UK aims for covid passport for overseas travel by late June, US CDC also prepares activity guidelines for fully vaccinated people.
- US Census report raise doubts over President Biden’s $2.25 trillion infrastructure spending, Brexit jitters continue.
- Covid updates can offer immediate moves, Fed, post-Brexit trade deal in the spotlight.
GBP/USD drops back below 1.3880, down 0.13% intraday, while heading into Tuesday’s London open. In doing so, the cable drops for the first time in three days as the US dollar index (DXY) snaps a two-day downtrend.
Although the US dollar’s corrective pullback takes clues from uncertainty over US President Joe Biden’s $2.25 trillion infrastructure spending, a lack of post-Brexit trade deal between the UK and the European Union (EU) also weighs on the GBP/USD prices. With the latest US Census report suggesting a move in favor of the Republicans, Biden’s stimulus plans and tax hike are likely to be challenged soon. Elsewhere, the ex-neighbors are yet to overcome the Northern Ireland (NI) protocol deadlock despite reaching close to the late April deadline.
Also affecting the sterling traders is the UK’s plan to rollout covid passport and the US Centers for Disease Control and Prevention’s (CDC) readiness to prepare guidelines for vaccinated people. It should, however, be noted that India’s covid woes are taking a toll on the market sentiment even as helps from Britain reached New Delhi while rescue measures from other developed world are in the pipeline.
On a different page, Britain reports the lowest daily virus infections since September on Sunday while the EU struggles to agree over the travel guidelines for foreigners.
Amid these plays, stocks futures wobble and so does the US 10-year Treasury yield. However, the US dollar index (DXY) benefits from pre-Fed caution amid the hope of an upbeat statement from the US central banks.
Moving on, Brexit and the coronavirus (COVID-19) headlines are crucial to watch for short-term moves before the key Federal Reserve day.
Technical analysis
50-day SMA and an ascending trend line from April 12, respectively around 1.3875 and 1.3868, test short-term GBP/USD pullback.