- GBP/USD bulls take a breather following the heaviest run-up in two weeks.
- UK PM Johnson said US President Biden didn’t alarm about the Northern Ireland situation, Brussels-Britain agrees over fishing catch.
- US Senators unveiled infrastructure agreement, G7 may push for covid origin investigation.
- Brexit chatters, G7 deal and UK’s April data-flow become the key.
GBP/USD consolidates the heaviest jump since May 27 below 1.4200, around 1.4175 amid the early Asian session on Friday. The cable cheered receding pessimism over the Brexit and the US dollar weakness the previous day. However, bulls turn cautious ahead of multiple catalysts scheduled for publishing during the day.
US President Joe Biden’s UK visit turned out to be less pessimistic than feared as UK Prime Minister (PM) Boris Johnson said that Biden is “a big breath of fresh air”. Reuters quote Downing Street while saying, he (Johnson) and Biden agreed that both Britain and the EU had a responsibility to work together and to find pragmatic solutions to allow unencumbered trade" between Northern Ireland, Britain and Ireland."
Also, news that Brussels and Britain agreed over the fishing catch offered an extra positive on the Brexit line. However, looming uncertainty over the Northern Ireland (NI) issue could make the Group of Seven (G7) meeting the key as the EU and the UK leaders may collide over the thorny issues under the leadership of Biden.
Elsewhere, doubts over the UK’s June 21 deadline for unlock seem doubtful as Johnson recently warned over the covid cases going up “very clearly”. Earlier on Thursday, the British scientist conveyed worries over the virus strains and their spread to trigger a third wave in the economy.
On the other hand, the US inflation figures jumped more than expected but markets seemed to have prepared for it, giving a lesser reaction than fears. Even so, US Treasury yields dropped and so do the US dollar to help the GBP/USD prices. That said, US Consumer Price Index (CPI). The headline US CPI marked the fastest jump since 2008 to 5.0% YoY while the Core CPI rallied to the highest in 30 years with a 3.8% figure.
It’s worth noting that the latest news over the US policymakers’ agreement on the infrastructure spending plan of $1.7 trillion for eight years, to be agreed by the White House, offered a fresh ray of optimism to the markets.
Moving on, expectedly rough talks on Brexit and the anticipated global push against China, led by the UK-US alliance, may weigh on the GBP/USD prices. Also likely to weigh on the Sterling could be the downbeat consensus for the UK data dump.
Technical analysis
Although 21-day EMA restricts the short-term downside of GBP/USD around 1.4130-25, the buyers have a bumpy road ahead. The monthly falling trend line near 1.4180 acts as an immediate hurdle before highlighting a downward sloping trend line from May 21, at the 1.4200 threshold. Additionally, 1.4220 and the recent multi-month top near 1.4250 act as extra filters to the north.
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