GBP/USD: Firm around mid-1.3800s amid US dollar weakness, holiday mood
|- GBP/USD prints three-day winning streak, refreshes one-week top, despite sluggish markets on Good Friday holiday.
- UK government offers relief of 400 million pounds for Glastonbury Festival, PM Johnson worried over French covid conditions.
- UK’s MHRA finds more AstraZeneca-led blood clotting cases but Pfizer showed a good immune response in over 80s after two doses.
- US dollar struggles to overcome Wednesday’s losses ahead of the key NFP data.
GBP/USD picks up bids around 1.3850, the highest since March 23, during early Friday. Although the Good Friday holiday restricts the cable’s moves, the US dollar’s sustained weakness and the UK government’s ability to celebrate the national festival, coupled with recently upbeat data, seem to favor the bulls ahead of the key US Nonfarm Payrolls (NFP) data.
While staying on its stimulus spree, the British government announced another relief to the locals by helping “2,700 museums, theatres, cinemas and arts venues in receiving a share of 400 million pounds in grants and loans,” per Reuters.
Not only Tory leaders’ push for more fiscal helps to overcome the pandemic, the UK’s vaccine and unlock optimism also favors the GBP/USD prices. After announcing major relief to the Britons earlier in the week, the government is gradually easing the coronavirus (COVID-19) restrictions to help them celebrate the festivities at home. Additionally, the news shared by Reuters also favors the sterling buyers by saying, “some 98% of 80 to 96 year-olds who had two doses of Pfizer’s coronavirus vaccine had a strong antibody immune response, adding to evidence that it can help protect those most at risk of severe or fatal COVID-19.”
It’s worth mentioning that the UK data, be it GDP or PMIs, have recently been portraying upbeat results of the government’s efforts and add to the GBP/USD upside momentum.
On the contrary, the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) identified 30 cases of rare blood clot events after the use of the AstraZeneca COVID-19 vaccine, 25 more than the agency previously reported. The same joins Britain’s tussle with China and PM Boris Johnson’s worries over the covid resurgence in France to weigh on the sentiment.
It should, however, be noted that Good Friday dominates above all and the US dollar continues to linger, despite sluggish moves, which in turn keeps buyers hopeful.
Moving on, considering the high hopes from the US employment figures for March, any disappointment will have higher costs and may renew the US dollar strength. Though, today’s inactive market conditions can tame the bears in that case.
Read: US Nonfarm Payrolls March Preview: Optimism and evidence this time?
Technical analysis
Given the normal RSI conditions and the higher low formation marked during the last two weeks, GBP/USD is expected to overcome the key hurdle around 1.3840-45, comprising a Five-week-old resistance line, 21-day and 50-day SMA. While a daily closing beyond 1.3845 will propel the quote to the 1.4000 threshold, failures to cross won’t welcome sellers until breaking the previous month’s low of 1.3670. Though, pullback moves to the 1.3700 threshold can’t be ruled out.
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