GBP/USD: Well bid beyond 1.4000 on US dollar’s south-run, UK employment data in focus
- GBP/USD bulls attack March month top during seven-day uptrend.
- DXY remains offered following the heaviest drop in 2021.
- Market sentiment turns positive amid stimulus, vaccine hopes.
- UK jobs report may ease but bears may not risk entries during the data-heavy week.
GBP/USD buyers cheer US dollar weakness while taking bids near 1.4007, up 0.14% intraday, ahead of Tuesday’s London open. In addition to the greenback’s slump, optimism concerning the UK’s economic recovery, backed by faster vaccinations, also favors the cable to jump to the highest since March 04. Even so, the bulls await the UK’s employment figures for fresh impulse.
After printing the year’s heaviest daily losses the previous day, the US dollar index (DXY) remains offered as the US Treasury yields and stock futures remain bid amid mildly positive market sentiment. That said, the US 10-year Treasury yields add 1.3 basis points to 1.61% whereas Futures of S&P 500 and FTSE 100 are both up 0.20% intraday by the press time.
While checking the catalysts behind the risk-on mood, hopes of breaking the deadlock over the US infrastructure spending bill and the faster vaccinations in the west gain major attention. US President Joe Biden’s readiness to alter his initial $2.25 trillion proposal seems to lure the Republicans to drop their initial rejection of the much-awaited stimulus.
Elsewhere, Israel and the UK extend their speedy vaccinations while also showing a cautious optimism when unlocking the economy step-by-step. In doing so, British PM Boris Johnson shuns travel plans to India amid rising infections and virus strains. The UK also said, per Reuters, “It would launch a new international expert group to help bolster the world’s preparedness for the next pandemic and expedite the development of vaccines against future diseases when they emerge.”
Chatters over Brexit, US-China and Russia-Ukraine tried to heavy the market sentiment but failed. However, those headlines are in the development stage and need further attention as and when cross the wires.
Other than the risk catalysts, the data-heavy calendar, starting with the UK’s jobs report for March, also becomes the key for the GBP/USD bulls. Forecasts suggest the headline Claimant Count Change ease from 86.6K to 25.5K during March whereas the Unemployment Rate may tick-up from 5.0% to 5.1% during the three months ended in February. Ahead of the data, Westpac said, “The February ILO unemployment rate is expected to hold at 5.0% as the extended furlough scheme continues to support the labor market.”
While the British figures may help GBP/USD to stay positive, a busy week ahead could challenge the sterling buyers and may trigger profit-booking moves in case of weaker-than-expected figures.
Technical analysis
Despite piercing seven-week-old horizontal resistance, GBP/USD bulls need a successful break above 1.4020 to keep the reins. Otherwise, pullback moves towards the early April tops near 1.3920-15 can’t be ruled out.