GBP/USD fizzles run-up beyond 1.3700 as traders await fresh clues

• GBP/USD consolidates recent gains while easing from 1.3745.
• UK PM Johnson hints addition to the British vaccine store, EU-UK tussle over jabs continue.
• Market sentiment wobbles amid fresh restrictions for retail equity traders following Gamestop drama, downbeat US GDP.
• Next week’s BOE will be the key, risk catalysts can entertain traders for now.

GBP/USD drops to 1.3725 while probing the previous day’s recovery gains from 1.3630 amid the initial Asian session on Friday. In doing so, the cable fails to cheer the upbeat news from UK PM Boris Johnson as the same suggests deterioration of Britain’s latest tussle with the European Union over the coronavirus (COVID-19) vaccine.

Novavax recently conveyed around 90% of efficacy and successful phase 3 trial results to tame the virus variant found in the UK. Following the announcement, UK PM Johnson said that the Medicines and Healthcare products Regulatory Agency (MHRA), Britain’s drug regulator, is already set to assess the Novavax vaccine after phase 3 trials showed 89.3% efficacy. It should be noted that UK PM Johnson also insists Oxford jab does work on over 65’s, per The Times.

While the news should have favored the GBP/USD, as market chatters suggest that London has ordered over 60 million doses of Novavax, subject to MHRA approval, the UK’s tension with Brussels might escalate over the same, which in turn probe the bulls. Brussels has recently started pushing the UK to make up for a short-fall of vaccine at home, which in turn roils the diplomatic ties with the ex-neighbor.

Also supportive of the risks could be comments from UK Health Secretary Matt Hancock who promised, per iNews, to the Britons that they will get the second jab in time.

On a broader scale, downbeat US Q4 GDP and volatility in the equities, followed by the trading restrictions for retail traders, probe the risk-on mood.

Amid these plays, Wall Street managed to recover some of its Fed-led losses while the US 10-year treasury yields also gained 3.8 basis points to 1.052% by the end of Thursday.

Looking forward, the British calendar is empty and the US data is also second-tier in nature compared to the latest Federal Reserve decision and US Q4 GDP, which in turn highlights risk catalyst to be watched for fresh impulse ahead of next week’s BOE.

Concerning the BOE, Australia and New Zealand Banking Group (ANZ) said, “BoE meet next week for the first time since the UK severed trading links with the EU. Anecdotal evidence is that new trading relations have disrupted supply chains with mixed implications for inflation. UK-produced food prices have fallen as the EU export market has slumped under the weight of bureaucracy. But the cost of importing goods has risen. How the BoE will quantify the impact Brexit and lockdowns on GDP growth will help shape forward guidance.”

Technical analysis

Bulls keep the driver’s seat unless GBP/USD drops below a 14-day-old support line, at 1.3640 now.