GBP/USD has been sliding amid dollar strength and concerns about the UK’s vaccination campaign. According to FXStreet’s Analyst Yohay Elam, sterling is set to suffer from Biden going big again and upbeat US jobs data as March draws to an end.
“Over 50% of adult Brits have already received at least one vaccine dose – or 42.9% of the population. However, only around 4% have received their second dose and are on course to full immunization. This second jab remains at risk amid supply issues. If the vaccination campaign suffers only a minor setback and cases continue falling, sterling will likely remain supported. However, a major halt to the rollout and an uptick in cases could send the pound plunging.”
“The economic calendar leading up to Good Friday is relatively light, but final GDP figures for the fourth quarter stand out. The UK was struggling with lockdowns through part of this period. The economy’s output at the end of 2020 serves as a base for the recovery. Markit’s final PMIs are also of interest.”
“President Biden addresses the nation from Pittsburgh on Wednesday and is set to lay out details of his infrastructure spending plan. Biden is contemplating splitting legislation into two pieces – spending on physical infrastructure first and then a separate bill that would include tax hikes and ‘human infrastructure.’ Waiting with the second, more controversial part for later in the year would make passing easier and would alleviate some pressure on the dollar. However, if Biden goes big again – like in the $1.9 trillion covid relief package – the greenback would have more reasons to rise.”
“America’s vaccination campaign is on course to reach 50% of the population by mid-May after topping 25% in late March. An increase in availability is due as the page turns to April. Any acceleration would be dollar-positive, while hiccups could weigh on the greenback.”
“In the latter half of the week, the focus shifts to the Nonfarm Payrolls report for March. Economists expect an acceleration in hiring to 500,000 after 379,000 in February. As long as participation remains low, any decline in the Unemployment Rate will probably be disregarded by markets.”