GBP/USD Analysis: US dollar recovers the previous day’s losses while refreshing intraday top to 1.3781, up 0.13% on a day, ahead of Tuesday’s London open. Although further easing of the UK’s covid-led lockdowns initially helped the Cable.
The latest gains could be traced from Britain’s vaccine optimism and hopes of easy relations between the UK and the European Union (EU). Above all, US dollar pullback from the yearly top plays its role to help buyers.
UK PM Boris Johnson joins almost 16 countries, including France, South Africa and Germany to sign a cross-border treaty “similar to the settlement forged after the Second World War to build cross-border cooperation before the next international health crisis,” per The Sun.
While this news helps Europe, hopes of easing tension among the old neighbors, due to working together and help solve the covid riddle, also favor the Sterling buyers as Brexit has been a disappointing affair for the UK.
That said, “Britain’s foreign minister Dominic Raab travels to Gibraltar on Monday to hold talks with the leader of the British territory about securing a post-Brexit treaty with the European Union over the future of the enclave on Spain’s southern tip, said Reuters.
Also on the positive side were news suggesting UK PM Johnson’s push for Novavax production in Britain to battle the vaccine jitters with the EU. On the same line, the UK’s Culture Secretary guarantees second vaccine doses in 12 weeks despite a slowdown in rollout from Monday, as per The Sun. It should also be noted that the vaccine efficacy results from Pfizer and Moderna as well as US President Joe Biden’s push for faster vaccinations also portray the vaccine optimism.
Meanwhile, the UK eases lockdown measures further towards allowing six people to meet outside for the first time in three months. However, UK PM Johnson warned ‘We don’t know how strong our fortifications are against new wave’. Amid these plays, Britain looks set to provide a further 50 million pounds in support package to sports even as BOE reports the lowest consumer borrowing in a year on Monday.
GBP/USD analysis mentioning that the US dollar pullback story could be related to the mild gains of stock futures and strong Treasury yeilds. Considering the West versus China tussles and vaccine optimism, dollar will need extra positives from home, amid a lack of major data/events, to keep the recent recovery moves.
Unless staying above 1.3750, comprising the neckline of short-term head-and-shoulders, dollar looks set to regain the 1.3800 threshold. Though, the quote’s further upside will be challenged by the 100-SMA level of 1.3853.