GBP/USD wavers around 1

GBP/USD wavers around 1.3700 amid mixed covid vaccine news, hints of UK’s recovery plan

iStock 1088749732 Large
  • GBP/USD picks up bids, shrugs off late Friday’s pullback.
  • EU’s Von der Leyen conveys difficult situation for vaccines despite AstraZeneca’s additional delivery.
  • UK PM Johnson, chancellor Rishi Sunak discuss pre-Budget “recovery plan” as record vaccinations trigger optimism at home.
  • Final reading of UK Manufacturing PMI, US ISM Manufacturing PMI to decorate the calendar.

GBP/USD fades the week-start uptick to 1.3709 while taking rounds to 1.3700 amid the initial Asian trading on Monday. The cable had to bear the burden of overall US dollar strength, amid risk-off mood, as well as the EU-UK tussle over vaccines while flashing a negative daily closing on Friday. Although recent headlines suggest the UK’s record jabs and recovery plans, coupled with the promise of increased AstraZeneca vaccine delivery to the bloc, doubts concerning the tension among the old pals stay on the table.

In her latest tweets, the European Commission President Ursula von der Leyen conveyed additional 900,000 jabs from the UK’s vaccine developer but also said, “it’s going to be a difficult situation for vaccines in March and April.” Additionally, her comments suggesting the UK is stepping back from the previous agreement on vaccines also highlight tussles and weigh on risks.

Contrary to the UK-EU tussle, England is up for helping Ireland with covid vaccines. The latest news from The Telegraph mentions, “Ministers examining sharing vaccines with other countries as soon as supplies for domestic program assured”. The update also highlights giving priority to Ireland for the said purpose.

Elsewhere, Britain’s 600,000 jabs a day seems to help UK PM Boris Johnson and Chancellor Rishi Sunak to prepare for anticipated recovery with a “pre-Budget recovery plan” comprising medium-term proposals to boost investment and skills, per the Financial Times (FT). The news also said, “The plan will be published in the week starting February 22, said government officials, as the prime minister releases a “road map” out of the current Covid-19 lockdown in England and starts to set out proposals to rebuild the economy.”

Other than the EU-UK jitters over the vaccines, challenges to the equity traders also weigh on the risks, which in turn helps the US dollar to remain strong versus major currencies during the early Asian trading.

Looking forward, the UK’s final reading of January’s Manufacturing PMI, expected to confirm 52.9 initial readings, will be the first data to direct the immediate GBP/USD moves. Following that, the US ISM Manufacturing PMI for the previous month, likely to recede from 60.7 to 59.5, will also be the key. Above all, risk news from equities and vaccines will be important to watch.

Technical analysis

Unless breaking a three-week-old ascending trend line, at 1.3670 now, GBP/USD sellers are less likely to search for entries. It should, however, be noted that the bulls may want to witness an upside break of a descending trend line from January 27, currently around 1.3745, for firming up the grips.

Credit: FX Street

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