GBP/USD Set To Resist Dollar Storm On Vaccine Milestone, Improving Technicals

Nearly 27 jabs per second – that is on reflections of Britain’s record day of vaccinations on Saturday, which concluded with over 873,000 injections. The UK’s rapid immunization campaign is having a material effect in pushing death rates down, and sterling up, allowing it to weather dollar strength. Will it continue?

Vaccines allow Britain’s gradual reopening to proceed with confidence, especially after the country reached 50% of all adults. The downside comes due to clashes with the EU over imports and exports of doses. The bloc is far behind the UK and is frustrated that AstraZeneca’s inoculations made on EU territory are exported to Britain. Brussels has threatened to block shipments and UK Prime Minister Boris Johnson will reportedly call leaders on the continent to calm things down.

COVID-19-related deaths are falling in the UK:

Source: FT

The UK is already suffering from potential issues with vaccine supplies from India and may and another delay would postpone the administering of second doses. Nevertheless, the campaign may have reached a point of no return where a significant part of the population has enough immunity to prevent new lockdowns. Such optimism may continue supporting the pound.

In the USreturns on ten-year Treasuries have stabilized around 1.70% after storming higher late on Friday. The Federal Reserve announced it is letting the pandemic era SLR exemption to lapse – a move that forces commercial banks to reduce some of their bond holdings. After several jitters, investors concluded that the effect is limited.

The next moves for the greenback are also set to come from the Federal Reserve. Chair Jerome Powell will deliver a speech on Monday, the first out of three public appearances in which he will likely reiterate his message of ongoing support – and dismissal of inflation concerns. Bond auctions due out later in the week are also eyed.

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