• GBP/USD has been bouncing from the lows as the dollar falls with yields. 
• The UK’s vaccine expansion may support sterling, while the Fed’s minutes mean uncertainty.
• Wednesday’s four-hour chart is showing the pair bounced off uptrend support.

And then there were three – Moderna’s (MRNA) vaccinations are joining those by Pfizer/BioNTech (PFE, BNTX) and AstraZeneca (AZN) in Britain’s battle against COVID-19. The UK already seems to have a lid over the spread of the disease – contrary to France which is under a strict lockdown and Germany, which is about to enter one. The deployment of the new inoculation is set to help contain the spread and reach more people. It also implies the potential for a quicker reopening.

However, GBP/USD depends heavily on movements in US yields. After cable bulls took profits on Tuesday, the fall in returns on American Treasuries helps sterling recover. Investors await President Joe Biden’s speech on the infrastructure program, which has higher chances of passing after the Senate parliamentarian ruled it can pass via reconciliation, a quicker process. If the US grows faster, the rest of the world may benefit.

Demands from conservative Democrat Joe Manchin to keep the corporate tax at 25% is music to investors’ ears – and may push the safe-haven dollar down.

On the other hand, optimism from the Federal Reserve poses a risk to GBP/USD gains. The Federal Reserve’s meeting minutes may show more members are warming up to raising interest rates sooner rather than later – and that could boost the greenback.

See FOMC Minutes March 16-17 Preview: Growth without inflation?

All in all, the virus situation is improving on both sides of the Atlantic, and the tug of war is yet to end. The pound may have the upper hand on Wednesday.

GBP/USD Technical Analysis

Pound/dollar has lost upside momentum on the four-hour chart but has managed to recapture the 50 and 100 Simple Moving Averages, a bullish sign. As the graph shows, the price held above the uptrend support line which accompanies cable since late March (FXB, UUP).

Some resistance awaits at 1.3855, a swing high from last week, followed only by the April peak of 1.3920. Further above, 1.3960 and 1.40 are eyed.

The first cushion is at 1.3705, where the uptrend support line hits the price. It is followed by 1.3740, and then by 1.37.