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  • GBP/USD bears catch a breather after a volatile day.
  • Worries over covid variants, unlocking joined Brexit chatters to drag the quote back from April 2018 tops.
  • US dollar rebound battles UK BRC Shop Price Index to trouble intraday traders.

GBP/USD treads water around 1.4150 during the initial Asian session on Wednesday. The cable jumped to the highest since 2018 before stepping back from 1.4248, not to forget posting the heaviest losses since May 19, the previous day. Although the US dollar rebound could be traced to the quote’s pullback moves, worries over the coronavirus (COVID-19) variants and Brexit chatters also joined the queue.

Having started the day on a back foot, the US dollar index (DXY) benefited from the easing of the Treasury yields to mark a corrective pullback towards 90.00. The greenback recovery could also take clues from the upbeat US ISM Manufacturing PMI.

On the other hand, chatters that Brexit led to £110 billion loss to the UK service exporters, per the research from the Aston University in Birmingham, marked furies over indecisive talks between the European Union (EU) and Britain over the trade deal. On the same line, the Daily Mail came out with the news saying, “The EU’s ambassador to London Joao Vale de Almeida stoked the row over Northern Ireland insisting there is ‘no alternative’ to the protocol that unionists want to be scrapped.” It should be noted that the launch of the UK’s post-Brexit independent trade authority, on Tuesday, is cited as a risk to the EU as the trade body can now levy sanctions on the bloc if needed.

Elsewhere, no new covid-led deaths couldn’t be cheered in the UK as scientists warned over heavy unlock even as the covid variants remain dominant. The same push the EU to keep the UK off from a safe travel list, per Reuters. It’s worth mentioning that the comments from BOE Governor Andrew Bailey suggesting reflation fears due to the green shift also weighed on the GBP/USD prices.

On the data side, the UK BRC Shop Price Index for April recovered from -1.3% to -0.6% YoY whereas ISM Manufacturing PMI jumped above 60.7 forecast and prior to 61.2 in May.

Amid these plays, S&P 500 Futures remain pressured and helps the US dollar to keep late Tuesday’s recovery moves.

Looking forward, an absence of the key data/events could keep the GBP/USD on the indecisive phase and search for the central bank, Brexit and covid updates for fresh impulse.

Technical analysis

A downside break of 10-day SMA, near 1.4170, directs GBP/USD towards a three-week-old support line near 1.4130.