- GBP / USD remains on the sidelines after rebounding from its five-month low.
- The EU rejects the UK’s request to change the NI protocol but is open to “practical and flexible solutions”.
- The UK is happy to have antibodies but reports a 50% weekly increase in deaths from the virus within one day.
- American decision-makers are scrambling over infrastructure spending, the budget, the ECB in the eyes.
GBP / USD crosses to 1.3710-20 amid a calm Asian session on Thursday. The pair reversed from February lows, marking the biggest daily gains in two weeks, following the decline in the US dollar the day before. However, the bulls appeared to have lost their bullish momentum of late due to a lack of major catalysts and cautious sentiment ahead of the European Central Bank (ECB) meeting.
The US Dollar Index (DXY) closed a four-day bullish trend while breaking through the highest levels since April on Wednesday as market sentiment improved. While no positive headlines can be held responsible, bullish profits can be attributed to strong stocks and a risk-oriented mood.
That said, the European Union (EU) has rejected a 28-page document to amend the UK’s Northern Ireland (NI) Protocol request. Despite this, EU Vice-President Maroš Šefčovič said, according to The Guardian, that Brussels has sought “flexible and practical solutions” and “will not accept a renegotiation of the protocol”.
On the other hand, the UK reported a slightly higher daily covid count, 44,104 from 42,302 last Wednesday, but a 50% weekly jump in the death toll to 73 continues to highlight fears of the variant of covid Delta. It should be noted that Australia also reported the highest daily infections since September, according to data from ABC News.
Elsewhere, U.S. policymakers have rejected the opening debate on President Joe Biden’s infrastructure spending bill, pushing it back to Monday, but Democrats appear optimistic about the passage. Additionally, Sino-U.S. Feuds escalate as U.S. trade representative Katherine Tai supports the trade dispute between Australia and China.
In the midst of those games, Wall Street closed positively and is helping the S&P 500 Futures print small gains at time of release. Additionally, 10-year US Treasury yields also remain firm for the third day in a row.
Given the lack of data / major events in the UK, GBP / USD traders will keep an eye on the results of the ECB meeting and the US second tier data flow, not to mention the risk catalysts, for a new impetus.
Although the GBP / USD regains 200-DMA, around 1.3710, buyers need to break through early July lows near 1.3735 to extend the rally moves.