• GBP/USD remains sidelined following a rebound from five-month low.
  • EU rejects UK’s request to alter NI protocol but ready for “flexible, practical solutions”.
  • UK cheers having antibody but reports a 50% weekly jump in virus-led deaths on a day.
  • US policymakers jostle over infrastructure spending, budget, ECB eyed.

GBP/USD takes rounds to 1.3710-20 amid a quiet Asian session on Thursday. The pair reversed from February lows, marking the biggest daily gains in two weeks, on the US dollar pullback the previous day. However, the bulls seemed to have lost upside momentum of late amid a lack of major catalysts and cautious sentiment ahead of the European Central Bank (ECB) meeting.

The US Dollar Index (DXY) snapped a four-day uptrend while stepping from the highest levels since April on Wednesday as market sentiment improved. Although no major positive headlines could be held responsible, upbeat earnings can be traced for strong equities and risk-on mood.

That said, the European Union (EU) rejected a 28-page paper to alter the Northern Ireland (NI) protocol request by the UK. Even so, EU Vice President Maroš Šefčovič said, per The Guardian, that Brussels has sought “flexible, practical solutions” and “will not agree to a renegotiation of the protocol”.

On the other hand, UK reported a slightly higher daily covid count, 44,104 versus 42,302 the last Wednesday, but a 50% weekly jump in the death toll to 73 keeps highlighting the Delta covid variant fears. It’s worth noting that Australia also reported the highest daily infections since September, per ABC News data.

Elsewhere, the US policymakers rejected opening debate on President Joe Biden’s infrastructure spending bill, pushing it back to Monday, but the Democrats seem optimistic over the passage. Further, the Sino-American tussles escalate as US Trade Representative Katherine Tai backs the Australian trade dispute with China.

Amid these plays, Wall Street closed positive and helps S&P 500 Futures to print mild gains by the press time. Further, the US 10-year Treasury yields also remain firm for the third consecutive day.

Considering a lack of major data/events in the UK, the GBP/USD traders will keep their eyes on the ECB meeting results and US second-tier data flow, not to forget risk catalysts, for fresh impulse.

Technical analysis

Although GBP/USD regains 200-DMA, around 1.3710, bulls need to cross the early July lows near 1.3735 to extend the recovery moves.