GBP/USD pauses two-day uptrend above 1.3700 as vaccine optimism battle Brexit woes

• GBP/USD wavers in 20-pip range, easing from the top off-late.
• UK hints COVID-19 booster and annual vaccinations, Oxford-AstraZeneca vaccine fails to combat South African variant.
• British government rejects claims of a 68% drop in the UK’s exports to EU.
• US stimulus hopes favor risks amid a light calendar, lack of news.

GBP/USD eases to 1.3725, down 0.09% while heading into the London open on Monday. In doing so, the cable stays within a choppy range above 1.3700 while respecting the US dollar’s latest pick-up and cautious optimism in the market. Also challenging the pair’s moves could be mixed signals concerning the UK’s coronavirus (COVID-19) vaccine plans and Brexit woes at home.

Despite recently receding covid infections and death tolls, the UK government authorities are worried over the variants that spread widely. As a result, Britain’s vaccine deployment minister said on Sunday, per Reuters, “A COVID-19 booster in the autumn and then annual vaccinations are very probable.” Though, news that AstraZeneca and Oxford’s joint efforts to tame the covid variant fall short of taming the South African strain challenge the sentiment.

Also on the negative side was news that the UK’s exports to the European Union dropped 68% following Brexit. However, the British government rejected the claims afterward, as per The Guardian. Additionally, the UK-EU tension over the Northern Ireland border escalates after “a new report by the Institute for Government has warned of more conflict across all issues “if the UK fails to manage the relationship’ with Brussels,” The Guardian said.

On a broader format, global markets are optimistic over the US stimulus package but China’s tension with the US, the UK and Australia probes the risk-on mood. On the same line, the return of the Washington-Tehran tussle also weighs on the sentiment.

Even so, stock futures stay mildly bid amid a light calendar in Asia while the US 10-year Treasury yields stay near the highest levels since March 2020.

Given the lack of major data/events scheduled for publishing on Monday, GBP/USD traders need to keep their eyes on Brexit, stimulus and covid headlines for fresh impulse. Overall, sterling is likely to stay positive amid the fight the UK gave to the virus and British stimulus. However, intermediate jitters can’t be ruled out.

Technical analysis

Although 1.3630 restricts the GBP/USD prices for the short-term, the pair’s upside momentum has a bumpy road ahead as 1.3760 and May 2018 peak surrounding 1.3775 challenge the bulls targeting the 1.3800 round-figure.