- GBP/USD trims early Asian gains from one-week low.
- UK Chancellor Sunak is up for £5 billion grants to High Street shops and hospitality firms in England.
- More than 20 million jabbed in Britain, Brazil variant hunt off-late.
- US FDA approved J&J one-shot vaccine, stimulus, PMIs eyed.
GBP/USD fades corrective pullback, recently easing from 1.4000, to revisit the 1.3970 while heading into Monday’s London open. The cable bounced off a one-week low in early Asia as market sentiment benefited from the calls of the UK and US stimulus as well as hopes of faster recovery from the coronavirus (COVID-19), due to one-shot covid vaccine approval. However, the US dollar trims the latest losses as the bond bears are lurking ahead of the key activity numbers and updates on the UK’s budget as well as the US covid relief package.
In his latest interview with the BBC’s Andrew Marr, UK Chancellor Rishi Sunak shed lights on the first Tory budget, up for publishing on Wednesday. The British diplomat not only dropped his earlier wish to balance the accounts with a tax-hike but also unveiled help to business houses worth as much as £18,000 per firm.
Also on the positive side were the UK’s 20 million jab landmark and hints to start immunizing above the 40s this month. However, the first case of the Brazilian variant pushed policymakers in England to repack their bags for rapid tests to trace the virus. To speak of more negatives, the European Union (EU) is said to have added British plants in its latest move as the ex-neighbors jostle over the Northern Ireland protocol.
On the other hand, the US Food and Drug Administration (FDA) approved Johnson and Johnson’s one-shot coronavirus (COVID-19) vaccines for emergency use during the weekend. Also on the risk-positive side is the US President Joe Biden’s $1.9 trillion covid relief bill’s run-up to the Senate.
Against this backdrop, S&P 500 futures and FTSE 100 Futures join stocks in Asia-Pacific to stay on the front foot while the US 10-year Treasury yields drop five basis points (bps) to 1.4% by press time.
Looking forward, the final readings of February’s UK activity numbers can offer immediate direction. However, GBP/USD traders will be more interested in the US ISM Manufacturing PMI and the UK budget for clearer directives. Should market optimism prevails during the US session, GBP/USD can keep the buyers around 1.4000, else there is a hope of further upside on Wednesday.
Read: US ISM Manufacturing PMI February Preview: Will business catch up with consumers?
Technical analysis
MACD prints the heaviest bearish sign in a month and hence challenges to the immediate support, namely the 21-day EMA level of 1.3900, can’t be ruled out. Though, any further weakness will be questioned by an upward sloping trend line from December, respectively around 1.3860 and 1.3775.
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