GBP/USD remains heavy below 1.3600 ahead of UK’s second phase of covid vaccinations
|- GBP/USD drops to the fresh low since December 12.
- UK’s covid numbers ease ahead of second phase of virus vaccination but the weekend readings are less reliable.
- Activity restrictions jump in the UK, travel corridors closes.
- American virus figures stay high but political play, risk-off mood favor US dollar amid off in Washington.
GBP/USD stays on the back foot near the intraday low, also the lowest since last Tuesday, while trading around 1.3565, down 0.15% on a day, ahead of Monday’s London session open. Although the UK’s coronavirus (COVID-19) numbers have improved during the weekend, fears of virus variants and fresh lockdown restrictions weigh on the sterling when the US dollar benefits from the risk-off mood. Given the off in the US, virus updates from the UK and news from the second phase of vaccinations in England will be the key.
Following the recent jump in the covid numbers and death tolls, which led to the third lockdown in the UK, Britain reported 38,598 new coronavirus cases on Sunday, which is the lowest since December 27. Even so, weekend numbers are generally less dependable due to the lag in reporting and hence fail to please the bulls. On the contrary, fresh activity restrictions in the UK, for travelers, weigh on the risk.
Read: New UK covid stats lower despite variant, vaccine rolled out
It’s worth mentioning that the US Centers for Disease Control and Prevention (CDC) Sunday reported 23,653,919 cases of the new coronavirus, an increase of 213,145 from its previous count, and said that the number of deaths had risen by 3,557 to 394,495, per Reuters.
Other than the virus woes, cautious sentiment ahead of US President Joe Biden’s arrival to the White House, as well as doubts over initial policies and challenges from Iran, exert additional downside pressure on the risks. Additionally, port blockage due to the lack of clarity in Brexit terms also weighs on the Pound.
Amid these plays, stock futures in the US and the UK remain pressured while the US dollar index (DXY) rises to a fresh high in a month by press time.
Looking forward, GBP/USD traders will keep their eyes on the virus updates and vaccine news from Britain for fresh impulse as the US markets are off due to Martin Luther King’s Birthday. Even so, news giving additional details of Biden’s stimulus and any more hardships for the upcoming government can also weigh on the quote.
Technical analysis
A one-month-old rising wedge formation on the four-hour (4H) chart keeps GBP/USD sellers hopeful to revisit the previous month’s low close to 1.3130. However, the quote’s sustained trading below the pattern support at 1.3535 and 200-bar SMA near 1.3480 add filters to the downside. Alternatively, 1.3615 and 1.3670 can entertain short-term buyers ahead of challenging them by an ascending trend line from January 04, at 1.3710 now.
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