- GBP/USD treads water below 1.3800, struggles to keep Wednesday’s recovery.
- British expats living without permanent residence will be pushed out from EU as Brexit kicks in.
- US President Biden’s infrastructure plan faces rejection from business lobby, virus woes escalate.
- Bulls look for an upbeat PMI after UK GDP triggered run-up, US ISM Manufacturing PMI is also important.
GBP/USD attacks the lower end of the 18-pip intraday trading range around 1.3780 while heading into the London open on Thursday. In doing so, the cable struggles to keep the previous day’s recovery moves as fears of Brexit woes and fresh challenges to the risk weigh on the UK’s vaccine and unlock optimism. This leads sterling traders to wait for the final reading of the UK Manufacturing PMI for March.
Following the stringent documentation and fishing wars, the Brexit story takes a fresh turn today as the European Union (EU) will start deporting Britons without residence in the bloc. While portraying the seriousness of the issues, The Sun said, “An expat group called British in Italy claims UK nationals have been left without healthcare, driving licenses and some have even lost their jobs because of the rule changes.”
Elsewhere, one-month lockdown in France and the UK’s successful battle with the coronavirus (COVID-19), not to forget the ability to get AstraZeneca accepted in the EU, favor the British pound. It should be noted that the UK-China tussle and the Sino-American tension join mixed vaccine updates from Pfizer and Johnson & Johnson to weigh on the risks.
Further, Ontario’s fresh activity restrictions and US President Joe Biden’s inability to please the American business lobby, even with a $2.25 trillion infrastructure spending plan, add to the risk-off mood.
However, positive vibes from the UK GDP and recent British UK, coupled with the ability to gain the fourth vaccine, namely Novavax, keep GBP/USD traders hopeful.
Amid these plays, stock futures struggle for clear direction but the US 10-year Treasury yields pause latest rally and the US dollar index (DXY) also seesaw amid mixed clues.
Moving on, UK Manufacturing PMI for March, expected to confirm 57.9 initial forecasts, will be the key to watch as any further advances in the data can extend the previous day’s run-up. However, Brexit chatters and any further deterioration in the EU-UK relation should heavy the quote. Also, the US traders’ reaction to the recent stimulus proposal and US ISM Manufacturing PMI will be the key.
Read: ISM Manufacturing Purchasing Managers’ Index March Preview: Consumer confidence reinforcement
Technical analysis
While GBP/USD are less likely to enter above March’s low of 1.3670, buyers will have to cross the 1.3840-45 resistance confluence including a 50-day SMA and a five-week-old falling trend line to keep controls.
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