GBP/USD retreats below 1.3900 amid impending vaccine crisis ahead of ahead of Fed, BOE
- GBP/USD prints mild losses, fades bounce off intraday low during three-day downtrend.
- France becomes 15th country to suspend AstraZeneca jabs over blood clotting allegations even as WHO, UK’s MHRA say its safe.
- EU takes legal actions over Britain’s NI protocol, BOE’s Bailey eyes pre-pandemic economy before 2021 ends.
- US Retail Sales, vaccine news can provide fresh impulse.
GBP/USD holds lower ground near 1.3870, down 0.17% intraday, while heading into Tuesday’s London open. In doing so, the cable drops for the third day in a row despite the US dollar weakness. The reason could be traced from the coronavirus (COVID-19) vaccine jitters in the European Union (EU) as well as the EU-UK tussles over the Northern Ireland (NI) protocol.
From the tension over vaccine jabs delivery to side-effects of the UK-Swedish covid cure, the drama over AstraZeneca (AZ) vaccines between Europe and Britain spills outside boundaries off-late. There is a total of 15 EU countries, France being the latest one, which has stopped jabbing AZ shots citing health issues even as the World Health Organization (WHO) and the UK’s medicine regulator Medicines and Healthcare products Regulatory Agency (MHRA) claims it as safe. Considering Australia’s readiness to use AstraZeneca jabs, in contrast to Venezuela’s rejection to authorize it, the vaccine crisis seems taking clues from Brexit.
Elsewhere, Brussels finally lodged a legal complaint about the UK’s extension of the NI protocol without confirming from the ex-neighbor. However, the region’s readiness to talk over the issue makes it a less severe problem compared to the vaccine jitters and virus variants. Even so, the White House urges the UK and the EU to preserve Northern Irish peace amid Brexit row, per The Guardian.
Amid these plays, BOE Governor Andrew Bailey crossed wires the previous day, via Reuters, while suggesting the UK’s full recovery to the pre-pandemic levels by the end of 2021. In doing so, the UK central bank Chief defies reflation fears while praising the government’s attempts to bolster the economy.
On the other hand, the US witnessed raw warnings from North Korea and Beijing also dislikes the American friendship with Taiwan. However, nothing matters more than this week’s monetary policy meetings in America and London. As a result, the pre-event sluggish mood tames the GBP/USD prices even as the US 10-year Treasury yields and the US dollar index (DXY) prints mild losses by the press time.
Moving on, the expected recovery in February’s US Retail Sales may help the GBP/USD pair to witness life but no major surprises can be expected ahead of the key events scheduled for publishing during Wednesday and Thursday.
Also read: US Retail Sales February Preview: Will the real consumer please stand up?
Technical analysis
Although GBP/USD bears battle a three-month-old ascending trend line, 50-day SMA and the yearly support line, respectively around 1.3800 and 1.3735, probe the quote’s further weakness. Meanwhile, recovery moves need to cross the three-week-long resistance line, at 1.4007 now, to recall the buyers.