- GBP / USD attempts a rebound above 1.40, multi-year highs back in sight.
- The British Prime Minister’s Office said the first step to ease the lockdown is expected to start from March 8.
- Reflation trading is also boosting the risky asset, the pound.
GBP / USD is back on the auction in the European session, once again approaching the 1.4050 level to retest 35-month highs.
Cable picked up new offers, bouncing off a brief drop to 1.3981, after UK Prime Minister (PM) Boris Johnson’s office announced that all four conditions to facilitate covid-induced lockdown are in place and the government can therefore proceed to the first. stage of reopening of the economy from March 8.
Meanwhile, Prime Minister Johnson said that “we will establish a roadmap for we out of lockdown with caution ”, with the reopening of schools as the main priority.
The UK has gained the first-mover advantage, in terms of covid vaccination and now with around 25% of the population vaccinated with the first dose. This factor continues to support sentiment around the pound.
Reflation trade amid vaccine and stimulus optimism continues to benefit the risky asset, the GBP, as investors ignore this latest Telegraph report highlighting looming Brexit risks.
Markets remain focused on the topic of reflation trades, awaiting further updates on a possible US stimulus deal. The main highlight of the spot remains British Prime Minister Johnson’s speech, in which he is expected to chart the way out of the lockdown.
GBP / USD technical levels
The upper line of an ascending trend channel from September 10, 2020, currently around 1.4035, preserves a short-term rise in GBP / USD. As the pullback moves towards the 1.4000 level, the mid-February high near 1.3950 will call into question any further weakness in the cable, ”noted FXStreet analyst Anil Panchal.