The GBP/USD pair's neutral performance in narrow ranges for several trading sessions in a row portends a strong move coming in one of two directions.
For four trading sessions in a row, the GBP/USD has been moving in a narrow range between the 1.3668 support level and the 1.3776 resistance level. The currency pair is waiting for investors to react to the British government abandoning some of the COVID restrictions and to concern about the side effects of some vaccines along with positive US economic data. The currency pair is holding around the 1.3750 level at the time of writing. In the midst of unstoppable efforts, Britain began providing COVID-19 vaccinations to anyone over the age of 45, after achieving its goal of giving at least one dose to everyone over the age of 50 by mid-April. Despite the good news, Prime Minister Boris Johnson warned that the UK would inevitably see “more hospitalization and deaths” as it emerges from lockdown. Coinciding with the start of trading this week, non-essential stores, hairdressers, gyms, restaurant yards and beer gardens have reopened in England.
Days before its self-imposed deadline of April 15, the government said that about 95% of everyone in its highest priority groups - over 50, health care workers and people with serious medical conditions - got a single dose. There are more than 32 million people, and more than 60% of adults in the country, who have received the first dose and about 15% of adults have received the two doses.
Vaccine eligibility was expanded on Tuesday for people between the ages of 45 and 49, and at the start of the second phase of the vaccination campaign. The government aims to give everyone over the age of 18 at least one dose by July 31. The move came the day after the abolition of some lockdown rules that had been in place for more than three months.
Despite this, politicians and scientists tried to calm the euphoria with the return of some freedoms by warning that the virus still poses a great threat.
Britain has witnessed the most dangerous outbreak of the virus in Europe, with more than 127,000 confirmed deaths. The combination of rapid vaccinations and lockdowns resulted in a sharp drop in infection and death rates. In return, many of Britain's neighbors, including France, imposed new restrictions to close with the increase in cases of the virus.
The pace of the vaccination campaign in Britain has slowed in recent weeks, with the number of first doses dropping sharply as the campaign focuses on administering the second doses. Like many other countries, Britain is also receiving lower doses than it had hoped, in part due to India's decision to stop exporting the Oxford-AstraZeneca COVID-19 vaccine from its serum institute.
Vaccination efforts in the UK have so far used the AstraZeneca vaccine and another made by Pfizer-BioNTech. Britain has also ordered 17 million doses of a vaccine produced by the American pharmaceutical company Moderna, with the first batch arriving earlier this month. Moderna will be given primarily to young people, following Britain's decision last week not to give AstraZeneca a dose to individuals under the age of 30 due to strong evidence that it may be linked to rare blood clots.
The UK economy saw 0.4% growth in February, rebounding from a sharp decline the previous month, as the rapid spread of COVID-19 vaccines boosted confidence in recovering from the pandemic. Accordingly, the Office for National Statistics said the growth was led by a 1.3% increase in industrial production and a 1.6% increase in construction as most non-essential stores remained closed due to the nationwide lockdown.
England celebrated the end of its third national lockdown on Monday with the reopening of gyms, hairdressers and non-essential stores. Bars and restaurants have also opened their doors, but only for outdoor service.
The British economy is still 7.8% smaller than it was in February as the UK recovers from its worst recession in 300 years.
Technical analysis of the pair:
The GBP/USD pair's neutral performance in narrow ranges for several trading sessions in a row portends a strong move coming in one of two directions, which is likely to be downwards in case the pair settles below the 1.3700 support level. Continuing vaccinations and loosening of restrictions will remain strong momentum factors for the pound in the coming days. Therefore, I still prefer to buy the currency pair from every downside. On the upside, bulls are bound to breach the 1.4000 psychological resistance in order to change the current bearish outlook.
The currency pair is not waiting for any significant UK economic data today. Accordingly, it will interact with risk sentiment and the market's reaction to the remarks of several monetary policy officials of the US Federal Reserve led by Jerome Powell.