Forex Market: GBP/USD regains area above 1.3800 as concerns over vaccine supply from the EU ease

GBP/USD managed to extend gains from late last week on Monday, while regaining the area just above 1.3800, supported by diminishing concerns over Britain’s COVID-19 vaccine supply from the European Union.

The UK seems to be on track to accelerate its vaccine roll-out during the upcoming months after the EU stopped short of imposing a ban on vaccine exports across the Channel.

“Overall, with UK-EU tensions over vaccine supplies easing and vaccinations in the UK keeping a good pace, markets continue to see the UK Government’s timeline to re-open the economy as realistic and therefore sterling is retaining some better resilience than other G10 currencies to USD appreciation,” Chris Turner, ING’s global head of markets, said.

Meanwhile, against a basket of six major peers, the US Dollar was holding gains on Monday, while being not far from last Thursday’s 19-week high of 92.917, supported by robust US macro data and a successful COVID-19 vaccine roll-out in the country.

The number of US initial jobless claims decreased to a one-year low last week, while US President Joe Biden announced intentions to double his vaccination target during his first 100 days in office.

“The U.S. is also being helped on its own by some pretty good economic data, fantastic rollout of vaccines, good pace of vaccination and (positive) stock markets,” Westpac currency analyst Imre Speizer was quoted as saying by Reuters.

“The domestic economy is doing better than expected and likely to be the case for the next few months, so that might hold the U.S. dollar up and that’s what’s caused the Aussie, kiwi and emerging-market currencies to pullback in March.”

As of 9:11 GMT on Monday GBP/USD was edging up 0.27% to trade at 1.3819, while moving within a daily range of 1.3756-1.3837. Last Thursday the major pair slipped as low as 1.3670, or its weakest level since February 5th (1.3658). The currency pair has retreated 0.79% so far in March, following a 1.71% gain in February.

Bond Yield Spread

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, equaled 8.3 basis points (0.083%) as of 8:15 GMT on Monday, up from 8.2 basis points on March 26th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 1.3773
R1 – 1.3821
R2 – 1.3860
R3 – 1.3908
R4 – 1.3956

S1 – 1.3734
S2 – 1.3686
S3 – 1.3646
S4 – 1.3607