Forex Market: GBP/USD hits a fresh two-week peak on UK’s vaccine roll-out success, improved risk sentiment, weaker dollar

GBP/USD extended last week’s gains and registered a fresh two-week peak on Monday, as the Sterling drew support from a partial re-opening of the UK economy and improving investor risk sentiment, while the US Dollar remained pinned near one-month lows.

The Pound’s positive sentiment was underpinned by the latest data surrounding the UK’s vaccination campaign. Almost 42.8 million people, or 64% of the UK population, have already received their first dose of a COVID-19 vaccine, while the country reported only 10 death cases on Saturday, one of the lowest figures since the start of the pandemic.

Meanwhile, against a basket of six major peers, the US Dollar was hovering near a one-month trough as bond yields remained near a five-week low after the Federal Reserve once again said that any surge in inflation would probably be temporary.

The Dollar Index was retreating 0.46% on the day to 91.197, while 10-year US bond yields were at 1.57% after slipping as low as 1.5280% last week.

Improved risk sentiment also weighed on the greenback, with the benchmark S&P 500 Index closing at an all-time high on Friday, while MSCI International ACWI Price Index, the broadest gauge of global stocks, held in proximity to Friday’s record high on Monday.

In an interview with CNBC last Friday, Fed Governor Christopher Waller said that US economy was “ready to rip”, as the vaccination campaign continues and activity accelerates. He also echoed comments from other Fed representatives over the past week that a pick up in inflation was likely to be transitory.

As of 9:18 GMT on Monday GBP/USD was edging up 0.32% to trade at 1.3876, after earlier touching an intraday high at 1.3890, or its strongest level since April 6th (1.3919). Last week it appreciated 0.95%, or its best weekly performance since mid-February. The major currency pair has gained 0.70% so far in April, following a 1.05% drop in March.

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 12.27 basis points (0.1227%) as of 8:15 GMT on Monday, down from 12.6 basis points on April 16th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 1.3797
R1 – 1.3878
R2 – 1.3923
R3 – 1.4004
R4 – 1.4085

S1 – 1.3752
S2 – 1.3671
S3 – 1.3626
S4 – 1.3581