GBP/USD defends 1.4100 amid fresh optimism over UK unlock
|- GBP/USD remains sidelined after the heaviest drop in over a week.
- UK PM Johnson regains optimism over June 21 deadline to end virus-led activity restrictions.
- US President Biden sought to break the Northern Ireland’s Brexit deadlock.
- US dollar pares FOMC Minutes-led gains as Treasury yields drop.
GBP/USD wobbles inside a 20-pip trading range, recently picking up bids near 1.4115, ahead of Thursday’s London open. Although markets reassess the previous day’s risk-aversion wave, led by the FOMC Minutes, UK PM Boris Johnson’s comments for unlocking seem to have helped the cable buyers of late.
“UK PM Johnson is increasingly optimistic that coronavirus restrictions can end as planned on June 21 after early data suggested that the Indian variant was not spreading as fast as previously feared,” said The Times. It should be noted that the British leader earlier cited a three-fold jump in the virus variant from India to raise doubts over June 21 deadline.
Elsewhere, the Financial Times quotes a bipartisan group of the US Congress that pushes President Joe Biden to break the Brexit deadlock, especially problems relating to Northern Ireland (NI). The US meddling gains major attention due to the promising history of Democratic President Bill Clinton’s ability to tackle the NI issues in 1994.
Alternatively, UK Trade Minister Liz Truss is struggling to reject the ire over the Britain-Aussie trade deal. “The trade secretary said a deal with Australia would benefit farmers across the UK by opening up a key market while also paving the way for growth in exports across Asia. She promised that the government would protect British farmers from overseas importers using ‘unfair practices’ to undercut them in the domestic market, said the Guardian.
On the other hand, the US dollar index (DXY) retreats with the US 10-year Treasury yields as traders need more clues to justify the fresh hopes of Fed tapering. Even so, US-China and the EU’s new VAT system, which is likely to be termed as anti-Brexit, weigh on the market sentiment.
Against this backdrop, stock futures remain sluggish but the bonds aren’t able to keep the previous day’s run-up.
Moving on, US Jobless Claims, Philadelphia Fed Manufacturing Survey and comments from the BOE board member Cunliffe could entertain the GBP/USD traders. Though, UK’s upbeat fundamentals and speedy recovery from the pandemic favor the bulls.
Technical analysis
Although a downside break of a three-week-old rising trend line keeps GBP/USD sellers hopeful, 10-day SMA probes further downside around 1.4100.
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