GBP/USD: Steady above 1.3900 with eyes on UK PM Johnson

• GBP/USD wavers in a choppy range after easing from intraday top.
• UK PM Johnson to unveil $3 billion stimulus for England’s busses, Britain eyes vaccines for all adults by early June.
• US President Joe Biden’s speech will also be important after Yellen cited hopes of faster recovery.

GBP/USD wavers around 1.3925-30 while heading into Monday’s London open. In doing so, the cable struggles for a clear direction after Friday’s pullback from the one-week top. Although a light calendar and the US dollar strength could be cited as catalysts behind the moves, the pair traders’ cautious mood ahead of UK PM Boris Johnson’s speech seems to be the main factor for the recent inactivity.

The Times came out with the news, during the weekend, suggesting vaccines for all British adults by early June. This becomes, “an achievement forecast to be worth tens of billions of pounds,” as per the analysis from The Times.

On the other hand, The Financial Times signaled that UK PM Johnson will launch the biggest shake-up of England’s bus network in decades on Monday with a framework for franchising and a pledge to invest £3bn, including on 4,000 new zero-emissions vehicles. Although the UK PM may primarily speak on bus-services, his comments on the latest tussle with the European Union (EU) over AstraZeneca will be important.

The Anglo-Swedish drugmaker recently finds rejection from the Netherlands and some in the bloc are also turned cautious in using the vaccine amid rumors of blood clotting due to the jabs, which the UK-Swedish team rejects. Other than the efficacy of the drug, fears of AstraZeneca’s lack of vaccine supply to the bloc also weigh on risks, especially when the ex-neighbors jostle over the Northern Ireland and fisheries.

Elsewhere, US Treasury Secretary Janet Yellen praised the covid relief bill while suggesting faster economic recovery due to the same. However, the reflation fears keep challenging the bulls and favor the US dollar index (DXY) amid firmer Treasury yields.

That said, the US 10-year Treasury yields remain strong around February 2020 tops, above 1.63%, whereas stock futures in the US and the UK trim early Asian gains by the press time.

Given the lack of major data/events, GBP/USD traders may keep their eyes on speeches from the UK and the US leaders, up for publishing today. However, major attention will be given to this week’s monetary policy meeting from the BOE and the Fed. Recently, the BOE policymakers have started scaling back their easy money promises but are hesitant to openly accept the reflation fears. Hence, traders will be interested in confirming any such fears to extend the cable’s weakness.

Technical analysis

A daily closing beyond 1.4000 becomes necessary for the GBP/USD bulls to avoid revisiting 50-day SMA level near 1.3790.