GBP/USD: Charging up for 1.4000 with eyes on Bank of England
|- GBP/USD consolidates post-Fed gains amid cautious sentiment on “Super Thursday”.
- BOE’s Bailey earlier signaled need for expansionary monetary policy to witness faster recovery.
- Brexit, Sino-American tussle and vaccine jitters keep a tab on the bulls.
- BOE is expected to keep monetary policy unchanged, QIR will be the key.
GBP/USD trims intraday losses around 1.3950 as cable traders embrace the Bank of England’s (BOE) Super Thursday while heading into the London open. The pair rose the most in a week after the Fed disappointed greenback bulls the previous day. However, the following pullback seems to portray the market’s cautious mood as BOE Governor Andrew Bailey earlier disappointed markets.
Not only the pre-BOE caution but chatters around the AstraZeneca vaccine also weigh on the quote. The UK-Swedish vaccine showed readiness to pump more jabs and match short deliveries but traders aren’t convinced ahead of today’s European Medicine Authority (EMA) announcement on whether the jabs are safe or not. Despite the hesitation in using the leading covid vaccine, the European Union (EU) warns to block jabs to other countries citing slower delivery in the bloc.
Elsewhere, the EU-UK keeps jostling over the Northern Ireland protocol as well as Britain’s readiness to raise marine security. Furthermore, news that the UK’s small businesses were hit by crash crisis and chatters surrounding England’s sturdy bias over Chinese and Iranian activities seem to also probe the risks.
On a broader front, the first virtual meeting between the top-tier diplomats of the US and China seems to weigh on the mood as Biden administration stays firm over China’s indirect push, ahead of the meet, over calling back the Trump-era measures.
Amid these plays, stock futures wobble at the top whereas bond bears keep the reins. However, the US dollar nurse the previous day’s losses but the GBP/USD bulls seem to stay hopeful amid economic recovery expectations.
Other than the economic optimism, the BOE’s rejection of reflation fears and praising of the latest vaccine drive should also help GBP/USD buyers. However, BOE Governor Bailey is known for surprise and hence any disappointment won’t hesitate to recall the sterling bears eyeing the key short-term support.
Read: Bank of England Preview: Green light to gains? Three ways the BOE can boost the pound
Technical analysis
Although a three-week-old resistance line guards the quote’s immediate upside around 1.3995, GBP/USD bears will be afraid to take entries unless witnessing a downside break of 50-day SMA, at 1.3813 now. Hence, any decisive move outside the stated 1.3995-3813 range should be the key to watch.
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