- GBP/USD trims pullback from fresh three-year high above 1.4200.
- Britain aims for faster vaccinations to regain economic traction before time.
- UK agrees to extend EU’s request to time for ratifying Brexit deal.
- AstraZeneca’s likely inability to keep EU vaccine delivery promises joins Powell’s effort to tame yields while testing bulls.
GBP/USD wavers around the mid-1.4100s, up 0.35% intraday, after stepping back from a brief rally to 1.4243 while heading into the London open on Wednesday. Cable seems to benefit from the greenback weakness amid optimism at home. Also favoring the sterling bulls could be options that triggered a spike on the EUR/GBP. Though, Brexit chatters and cautious sentiment ahead of Powell’s second testimony session test the rally.
Although broad US dollar weakness and the UK’s unlock announcements are favorable to the cable bulls, not to forget upbeat jobs report, chatters that Britain can regain traction on faster vaccination drive, shared via Telegraph, propelled the run-up to 34-month top. Also on the positive side could be the British readiness to offer the European Union (EU) time till April to ratify the Brexit deal.
Furthermore, the UK’s jab count of 18 million and readiness to weigh vaccine passports, to not disappoint the travelers during festivals, offered extra strength to the GBP/USD prices.
Meanwhile, AstraZeneca’s fear of not being able to perform on the EU’s contracted vaccine delivery join British scientists warning over UK PM Boris Johnson’s June deadline for total unlock to challenge the run-up. US central banker Powell’s readiness to tame the yields with prolonged easy money also tried to disappoint bulls, but couldn’t as the British jobs report painted a rosy picture.
Against this backdrop, S&P 500 Futures remain mildly bid whereas global yields pause the latest rally.
GBP/USD traders should keep their eyes on any major announcement to tame the bond coupons, less likely though, during Powell’s testimony 2.0. Also important will be how the bloc responds to AstraZeneca's note and UK’s help on Brexit as well as further unlock hints from the Tory government.
Considering the recently improving fundamentals, Britain is up for recovery but not as fast as GBP/USD runs to the north.
Technical analysis
Sustained break of highs marked during March 2018, around 1.4245 becomes necessary to attack January 2018 tops and the yearly peak of 2018, respectively near 1.4345 and 1.4375. Meanwhile, pullback moves may eye the 1.4000 threshold but remain less strong above the three-week-old support line near 1.3950-45.
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