GBP/USD has room to run in response to the UK reopening and US stimulus

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GBP/USD has finally hit the round 1.40 level in a mix of British of upbeat UK coronavirus statistics and a twist lower in the dollar amid yield-moving stimulus speculation. Both topics are expected to reach the climax in the last week of February, while economic data is set to have its time in the sun as well, FXStreet’s Analyst Yohay Elam briefs.

Key quotes

“Tensions are mounting ahead of Monday’s reopening speech as details are surprisingly scarce. Investors want more sectors to open sooner. The plan will likely consist of several stages and will likely depend on the pace of vaccinations and not solely on infections.” 

“The embattled leader has recently learned to lower expectations, and perhaps he will introduce a cautious and piecemeal approach. Such a move would trigger a ‘buy the rumor, sell the fact’ response, sending sterling down.”

“Britain’s Unemployment Rate has been gradually climbing but remains low due to the government’s successful furlough scheme. Economists expect another rise from 5% to 5.1% in December. Average earnings are set to decelerate after picking up beforehand. The more up-to-date Claimant Count Change is predicted to jump by 35K after barely budging in December.” 

“Investors have been following every move to push the $1.9 trillion covid relief package. The climax may come now – with a potential vote in the House on February 26. Anything from $1.5 trillion or higher would be music to investors’ ears. A package closer to $1 trillion can be considered a disappointment. 

“After the ‘deep freeze’ storm, America’s vaccination may resume its acceleration. One factor that may accelerate supplies is a potential approval of Johnson and Johnson’s single-shot vaccine. The Food and Drugs Administration (FDA) meets on Friday to discuss J&J’s solution and is likely to grant emergency authorization, allowing deployment in the following week.”

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