GBP/USD: Looks to UK Retail Sales, PMI to regain 1.3900

• GBP/USD consolidates the heaviest losses in nearly two weeks.
• Vaccine hopes, doubts over Biden’s capital gains tax hike proposal portray mild risk-on mood.
• Brexit jitters renew ahead of April 27 deadline, French fisherman eyes blockade ports over no access to UK waters.
• CBI hints British factories expect strongest rebound since 1973, Retail Sales for March, April’s preliminary PMIs bear upbeat forecasts.

GBP/USD stays mildly bid around mid 1.3800s, up 0.11% intraday, while heading into Friday’s London open. In doing so, the cable pares the heaviest losses in 12 days as trading sentiment benefits from covid vaccine updates and optimism concerning the key statistics from the UK.

UK scientists back claim that vaccines slash the coronavirus (COVID-19) infections with a 65% success ratio among adults, even as the study was conducted amid spreading virus variants, per Reuters. Elsewhere, increasing odds over the Johnson & Johnson vaccine’s return to the shelf, after discontinuation over blood clotting issues, join faster jabbing in the West to print vaccine optimism.

Elsewhere, The Sun came out with the news suggesting French fishermen will launch a blockade of UK exports to the continent in protest at lost access to the British waters. This came when the European Union (EU) and the UK are already jostling over the Northern Ireland (NI) protocol ahead of the deadline to sign the final deal on April 27.

The UK’s post-Brexit deal isn’t only struggling when it comes to the EU but has recently roiled when noticing developments concerning trade pact with Australia and New Zealand (NZ). While Australia gives high priority to the deal with the bloc, NZ marked its ties with China as a weak point to agree with England inside the five-eye group that also consists of the US, Canada and Australia as other members. Also challenging  optimism for GBP/USD could be The Guardian’s news saying, British MPs voted to declare that China is committing genocide against the Uyghur people in Xinjiang province.”

Amid these plays, stock futures print mild gains during the aftershocks of US President Joe Biden’s proposal to hike capital gains tax. However, the US 10-year Treasury yields stay undecided near 1.56% whereas the US dollar index (DXY) drops 0.10% by the press time.

Looking forward, the UK’s Retail Sales for March is expected to reverse the previous -3.7% contraction with +3.5% YoY figures whereas Manufacturing and Services PMIs are also up for a strong recovery during their April’s flash readings. As per the Confederation of British Industry’s (CBI) quarterly survey of manufacturers, UK manufacturers hope for an economic rebound rose to their strongest in 48 years this month as the country began to recover from the slump caused by the COVID-19 pandemic.

It should be noted that the US PMIs for the said period is also up for publishing during the North American session and can keep the GBP/USD pressured amid hopes of upbeat outcomes. However, risk-on mood may weigh on the US dollar and hence the sterling has brighter spots to remain on the front foot.

Technical analysis

The upbeat forecasts for the scheduled UK data and recovery in the MACD signals back the GBP/USD bulls. As a result, an upside break of 200-HMA level around 1.3845 can escalate the recovery moves toward Wednesday’s low near 1.3885. Though, a convergence of 100-HMA and four-day-old resistance line around 1.3920-25 will be a tough nut to crack for buyers. Meanwhile, sellers need a clear break below an upward sloping trend line from April 12, around 1.3833 by the press time, to direct the quote towards 61.8% Fibonacci retracement of April 12-20 upside, close to the 1.3800 threshold.