GBP/USD: Bulls await UK Chancellor Sunak’s key budget with eyes on 1.4000

• GBP/USD wavers in a 15-pip trading range after Tuesday’s recovery from two-week low.
• British Chancellor Rishi Sunak ready to do “whatever it takes” but traders stay cautious as high hopes often disappoint.
• Furlough extension, personal/business benefits aimed for faster economic recovery.
• US stimulus, vaccine news and Services PMIs to offer extra filters to cable’s moves.

GBP/USD stays sluggish as taking rounds to the 1.3950-65 trading range, currently around 1.3960, while heading into the London open on Wednesday. The pair portrays the typical cautious sentiment ahead of the key event, i.e. the British annual budget, while also respecting the broad US dollar weakness and risk-on mood.

More firepower to save jobs and businesses…

On Tuesday, around 12:30 GMT, UK Finance Minister Rishi Sunak will be in the global stoplight as he will deliver his second annual budget for the British economy. While the Chancellor of the Exchequer has already signaled readiness to do “whatever it takes”, traders would seek clues as to how the present freebies will be curtailed in the future to determine immediate GBP/USD moves.

Among the most talked-about measures, a five-month extension to the furlough, from April to September, as well as heavy support to business and no tax rate hike, gained major attention. Additional details suggest an extension of stamp duty and keep maintain the £20 a week uplift in universal credit for six months, per The Guardian.

However, British borrowing is already highest since World War II and hence UK Chancellor Sunak may not miss the opportunity to signal future balancing of the finances. Herein the deadline for hiking the corporate tax from 19% and how faster the economy can recover from what the Sky News said, “after suffering its deepest annual decline for three centuries last year when GDP shrank by 9.9%.”

Elsewhere, the UK is up for getting ten million AztraZeneca vaccine from the Indian manufacturer of Serum Institute of India (SII) but then this doesn’t help to overcome the fears of Brazilian covid variants as the search for suspect extends in London. On the other hand, US President Joe Biden prepones the time to immunize all the American adults from July to previously announced May.

Against this backdrop, stock futures from the UK and the US print mild gains whereas the US 10-year Treasury yields look for clearer direction by press time.

Other than the UK Budget, the final reading of the Britain Services PMI for February, expected to drop from 49.7 to 38.8, followed by the US ISM Services PMI, likely to remain unchanged at 58.7, will entertain the GBP/USD traders. Overall, the cable is in an uptrend and can escalate the northward trajectory on welcome details from the UK’s much-awaited budget. However, any disappointment won’t be taken lightly and hence should be traded with caution.

Technical analysis

GBP/USD grinds to the north amid sustained trading beyond key trend lines from December and September 2020. However, the 1.4000 guards immediate upside with the 21-day EMA near 1.3905 acting as nearby support to watch during the pullback.