The pound sterling proved to be just as good as the US dollar, returning above $1.385. Yes, the American economy looks impressive, but the latest statistics from the UK showed that everything is fine with it. Yes, Joe Biden promises that after his first 100 days in office, 90% of US adults will be able to get vaccinated against COVID-19, but vaccinations in Britain are still going faster than in the US. Yes, the yield on American bonds is growing by leaps and bounds, but their counterparts from the UK are not completely shaken.

According to Barclays research, the British bond market plunged into its worst sell-off since 2000 in March. The yield on debt instruments grew as fast as their American counterparts, which did not give the GBP/USD bears any significant advantage. The blame is the rapid vaccination, which strengthens the belief that the UK economy will fully open by June 21. At the same time, the colossal deferred demand suggests that it will grow not just quickly, but very quickly.

Dynamics of the UK debt market

Indeed, according to the Office for National Statistics, in the fourth quarter, the average percentage of the disposable retained income of British households rose from 14.3% to 16.1% due to the population's limited ability to spend during the COVID-19 era. Households increased their deposits by £17.1 billion in February, according to the Bank of England. This figure is higher than the 2019 average of £4.6 billion and higher than at the peak of the pandemic in March 2020 – £15 billion. When the restrictions are lifted and money flows into the economy, it will have no choice but to grow rapidly.

Along with the optimism hovering in the ranks of investors because of the bright future of the UK, the dynamics of its economic surprise index convinces that things are still going quite well at present. Britain is adapting to lockdowns, the epidemiological situation in the country is improving, vaccinations are in full swing. Should we be surprised at the worst quarterly dynamics of EUR/GBP since 2015? For the EU, this spring is still extremely difficult due to population fatigue due to quarantine, the fight against new strains of COVID-19, and the lack of vaccines.

Dynamics of the economic surprise index in the UK

The euro is not a competitor to the pound, but the United States felt competition in the face of Britain. Could this explain the White House's intention to impose import duties on ceramics, cosmetics, furniture, game consoles, and other goods coming from the UK to the US for $325 million, allegedly in response to London's introduction of digital taxes on the activities of American technology companies?

Technically, the inability of the GBP/USD bears to keep the pair quotes below the lower boundary of the previous consolidation range of 1.38-1.4 indicates their weakness. The growth of the pound above the middle of the trading channel ($1.39) will activate the "False Breakout" pattern and will allow the formation of long positions with targets at 1.405 and 1.416.

GBP/USD, Daily chart