GBP/USD keeps 1.3800 amid cautious optimism over Brexit, virus ahead of UK GDP
- GBP/USD buyers attack the upper end of 20-pip range.
- EU’s Sefcovic called talks with UK’s Gove constructive.
- BOE’s Haldane eyes double digit growth post-covid, chatters over activity restrictions until autumn gain.
- UK GDP set to test BOE’s bullish stance, US data, stimulus talks also become important.
GBP/USD picks up bids to 1.3817 while trying to break out the latest range above 1.3800 during the initial Asian session on Friday. In doing so, the cable struggles to overcome the previous day’s losses, the first in last six, amid recently positive updates concerning the Northern Ireland (NI) border discussion between European Commission Vice President Maros Sefcovic and Britain’s top Brexit minister Michael Gove.
Old mixed Brexit song but optimism firms over virus, vaccine…
EU-UK marks another indecisive end to the Brexit talks, despite terming the latest meeting in London as constructive. Following the meet, EU’s Sefcovic also tweeted, “Set to intensify our joint work on IE/NI Protocol to ensure solutions mutually agreed in Dec are implemented and to address all outstanding issues. Joint Committee to meet no later than 24 Feb.”
On the other hand, European Union’s chief Brexit negotiator Michel Barnier again blamed the UK for the NI problems during his comments at the European Business Summit event on Thursday. Reuters quotes the comments as saying, “Both parties must be conscious of their responsibilities in applying fully this protocol. The difficulties on the island of Ireland are caused by Brexit, not by the protocol.”
Elsewhere, Bank of England’s (BOE) chief economist Andy Haldane told the Daily Mail that he believes a 'decisive corner has been turned' thanks to the Covid-19 vaccine rollout, per The Sun. The BOE member further said, “The recovery should be one to remember, after a year to forget. A year from now, annual growth could be in double-digits.”
It should, however, be noted that The Times came out with the news suggesting extended social distancing measures until autumn.
Rumors over what could be expected and what won’t be welcomed in the next month’s UK budget also gained market attention. In the latest update, The Sun said, “A budget rise in fuel duty would be a hammer blow to the North, UK Chancellor Rishi Sunak has been warned.”
On the other hand, the US stimulus talks are progressing and President Joe Biden recently spread vaccine optimism. Though, a light calendar in Asia, amid China’s off, limit market moves.
Against this backdrop, S&P 500 Futures prints mild gains above 3,900 after Wall Street benchmarks closed mixed the previous day.
Looking forward, GBP/USD traders will be closely watching the UK data dump, scheduled for publishing at 07:00 AM GMT. Among them, the preliminary reading of the fourth-quarter (Q4) UK GDP, expected 0.5% QoQ versus 16% prior, will be the key. While the market expects the economic figures to disappoint the cable bulls, any surprises will see the fresh multi-month high.
Read: UK GDP Preview: Buy the rumor, sell the fact? BOE's bullish stance may backfire
Technical analysis
Spinning tops near multi-month high suggest traders’ indecision ahead of the key events. Though, bulls can keep 1.4000 on the radar unless witnessing a downside break of January’s top surrounding 1.3760.