GBP/USD: Bulls retake controls around 1.3700, eye BOE’s Bailey

• GBP/USD refreshes intraday high while extending late Friday’s bounce off 1.3635.
• US dollar weakens as stimulus optimism offset virus woes, US President Biden set to recall travel ban on the UK.
• Dutch riots, fears that vaccinated Britons could still pass virus mutations weigh on the risks.
• BOE’s Bailey will speak at the World Economic Forum, comments on negative rates will be eyed closely.

GBP/USD buyers flirt with 1.3700, recently intraday high of 1.3708, while heading into the London open on Monday. In doing so, the cable follows the general trend of cheering US dollar weakness while failing to highlight the coronavirus (COVID-19) worries at home. However, bulls are cautious ahead of the Bank of England (BOE) Governor Andrew Bailey’s speech at the World Economic Forum (WEF) as challenges to his rejection for negative rates mount off-late.

Despite vaccinating over five million Britons, England's deputy chief medical officer Professor Jonathan Van-Tam warned that the millions of people who have received their jab must still obey social-distancing rules. "Even after you have had both doses of the vaccine you may still give COVID to someone else and the chains of transmission will then continue,” wrote the Professor in The Sunday Telegraph. Amid these warnings, Dutch police detained over 240 rioters who protest lockdowns in Netherland and risk spreading the virus and/or variants faster. That said, “On Saturday, the UK recorded another 1,348 coronavirus-related deaths and 33,552 cases, according to the latest government figures,” mentioned the Sky News.

This could be a reason for US President Joe Biden to reiterate his push to stop travelers from the UK, Ireland and Brazil.

Elsewhere, US Senators are flashing mixed signals over President Biden’s $1.9 trillion stimulus passage in the upper house. However, the latest one from the incoming chairman of the US Senate Budget Committee, also a Vermont Senator, Barnie Sanders seems to have lifted the mood.

Against this backdrop, stock futures in the UK and the US print mild gains while the US 10-year Treasury stays firm above 1.0%. Moving on, the US dollar index (DXY) drops 0.10% by press time.

Moving on, chatters that the British policymakers are mulling a completer border close and double-dip recession can keep the GBP/USD buyers challenged around the multi-month top. As a result, comments from Bailey will be the key as traders will be interested in hearing about negative rates. Additionally, US stimulus headlines and virus updates can also direct short-term GBP/USD moves.

Technical analysis

Unless declining back below the 21-day SMA level of 1.3615, GBP/USD buyers keep targeting ascending trend line from December and September 2020, respectively around 1.3740 and 1.3880.