GBP/USD stays depressed below 1.3700 amid EU-UK jitters over vaccine

• GBP/USD drops for the second consecutive day while fading bounces off 1.3650.
• EU demands UK covid vaccines from AstraZeneca to make up for slack at home.
• Imperial College London hints virus infection stable or falling slightly off-late.
• US GDP is less likely to reverse Fed-led losses but surprises can’t be denied.

GBP/USD is currently offered around 1.3660, down 0.10% intraday, during early Thursday. The Cable refreshed the 32-month peak on Wednesday before declining to 1.3659 on broad US dollar strength, led by the ECB and Fed comments. Adding to the quote’s weakness were the latest comments from the European Union (EU) suggesting further tension between the bloc and the UK, this time over the vaccine. Moving on, the US GDP and the risk catalysts are likely to keep the driver’s seat.

With the coronavirus (COVID-19) vaccine shortage at home, the EU is demanding Britain to make-up for the shortfall due to the British drugmaker AstraZeneca. “The EU has said AstraZeneca must take coronavirus vaccines from UK factories to make up a shortfall in supplies to its member states, a demand that could unleash an explosive post-Brexit political fight,” mentioned the Financial Times (FT).

Following the news, UK PM Johnson said, per BBC Political Editor Laura Kuenssberg, that the issues are a matter for our EU friends and companies concerned.

On a positive side, research by the Imperial College London mentioned, per the Financial Times (FT), “There are tentative signs that the lockdown in England is beginning to curb coronavirus transmission, according to a closely watched study, although stubbornly high infection rates will continue to strain the overstretched healthcare system.”

Elsewhere, new that the US Treasury has postponed ban on American investments in companies with an alleged connection to the Chinese military seemed to have favored the risks off-late. The move could also have taken clues from the US Federal Reserve Chairman Jerome Powell’s cautious optimism.

Against this backdrop, S&P 500 Futures lick its wounds while stocks in Asia-Pacific follow Wall Street benchmarks’ heavy losses.

Looking forward, the tension between Brussels and London can keep the GBP/USD depressed ahead of the key US GDP figures, expected 3.9% versus 33.4% prior. As investors eye for a downbeat US growth, any positive surprises won’t be taken lightly. It’s worth mentioning that the covid, vaccine and US stimulus news are important too.

Technical analysis

Strong RSI conditions and successful trading beyond 10-day SMA, currently around 1.3665, favors the GBP/USD buyers to challenge the May 2018 high of 1.3772. Alternatively, the pair’s declines below the 10-day SMA level of 1.3665 need to break a confluence of the short-term ascending support line and 21-day SMA, currently around 1.3640-35, to convince GBP/USD sellers. Following that, the monthly low near 1.3450 should gain the market’s attention.