GBP/USD stays above 1.3700 despite looming border close in Britain, eyes UK Retail Sales, PMIs

• GBP/USD bulls catch a breather as the quote gyrates near the upper end of immediate trading range.
• UK policymakers push PM Johnson for full closure of UK borders, EU policymakers also emphasize further strict activity restrictions.
• Biden administration fears worsening virus woes, delay in vaccinations but keep markets positive.
• UK Retail Sales and PMIs will decorate the calendar, virus and vaccine updates keep the driver’s seat.

GBP/USD eases to 1.3730, after refreshing the multi-month high the previous day, during the early Asian session on Friday. The chatters over the UK policymakers’ push for the total border seal and worsening coronavirus (COVID-19) conditions in Britain seems to challenge the bulls off-late. However, the risk-on mood emanating from the new government in the US favor the quote’s upside momentum. However, the cable traders will keep their eyes on December’s Retail Sales and activity numbers for fresh impulse after the latest British inflation data favored optimists.

The Telegraph is up for conveying the UK ministers’ push to Prime Minister (PM) Boris Johnson for full closure of UK borders. On the same line, The Sun reported, “Boris Johnson today warned it was ‘too early’ to say whether coronavirus restrictions are to be lifted before spring or even summer.” Further, Reuters also quotes UK’s Interior Minister Priti Patel as saying, “The advice is very clear we are in a lockdown, the public should be staying at home.”

On the other hand, the European Union (EU) leaders are also jostling with the stricter lockdown. “Angela Merkel has warned of the danger of a third wave from the new variants of coronavirus, as EU leaders drew up a blueprint that could lead to a ban on travelers from the UK and restrictions on movement across the bloc’s internal borders,” said the Guardian.

On the positive side, new data released by the UK’s National Health Services (NHS) England for the week ending 17 January, as conveyed by the Sky News, showed the East of England saw the number of first doses administered rise by 45%, the biggest among the regions compared to the preceding seven days.

It’s worth mentioning that the US administration is also worried about the jump in the virus-led death toll and has recently turned down the Trump team’s claims of availing vaccines in the pharmacies by February-end. However, Joe Biden’s fiscal stimulus favors the market sentiment.

Amid these plays, Wall Street benchmarks closed mixed while the US 10-year Treasury yields rose mildly to 1.10%.

Looking forward, December’s UK Retail Sales, expected 4.0% YoY versus 2.4% prior, will be the key after recent improvement in the Consumer Price Index (CPI) data. Also, preliminary readings of January’s Manufacturing and Services PMIs, expected 47.9 and 54 versus 49.1 and 57.5 respective prior, will add to the watch list. Ahead of the release, Westpac said, “December retail sales will be hampered by lockdowns over the holiday period but spending has been resilient lately. Meanwhile, December public sector borrowing will remain elevated as the stimulus continues.”

Technical analysis

While multiple tops marked during January highlight the 1.3700 as the key immediate support, the weekly rising trend line near 1.3685 adds to the downside filter. Meanwhile, the 1.3800 lures GBP/USD bulls.