- GBP / USD is struggling to capitalize on its positive intraday move despite a weaker USD.
- Concerns about the disruption of the UK launch of the vaccine weigh on the British pound.
- The technical setup favors the prospects for a retest of the multi-week lows near the 1.3670 area.
The pair GBP/USD has returned the initial bullish move to the 1.3780 region and it has quickly retraced around 60 pips at the start of the European session on Thursday, falling to a daily low near 1.3720. At the time of writing, the pair is practically unchanged on the day around the 1.3735 level.
The US dollar has struggled to capitalize on the rebound of the previous day, from lows of more than two weeks, and has moved lower during the first half of trading action on Thursday. This, in turn, has been seen as a key factor that has helped the GBP / USD pair gain some positive traction and move away from the one-week lows hit the day before.
The Underlying bullish sentiment in financial markets has weighed on the safe-haven US dollar, further affected by a modest drop in US Treasury yields. Apart from this, the GBP / USD rally has lacked an obvious fundamental catalyst and quickly lost steam.
Regarding economic data, the UK construction PMI has jumped to 61.7 points in March from 53.3 the previous month and it has exceeded even the most optimistic estimates. However, the data has done little to impress the bulls or provide a significant boost to the GBP / USD pair amid the rallies. concerns about the UK vaccine launch interruption.
The UK medical regulator on Wednesday issued a Temporary ban on AstraZeneca vaccine for the age group under 30 years. In addition, the trial of this vaccine against the coronavirus in children has been stopped. This fed the speculation about a delay in the government’s plan to reopen the economy, which now seems to weigh on the British pound.
From a technical perspective, the emergence of some new sales at higher levels supports the prospects for an extension of the sharp pullback of the GBP / USD pair from levels beyond 1.3900. Therefore, a subsequent dip below the 1.3700 level, en route to multi-week lows in the 1.3670 region, now seems like a clear possibility.
GBP / USD technical levels