GBP/USD: UK regional and local elections to cap rebounds – Westpac
|A moderation in vaccinations and political tensions have weighed on GBP/USD but range support at 1.3670-00 has held with scope for range trading rebounds, according to economists at Westpac.
GBP’s pullback is understandable
“GBP recent softness, notably versus EUR, coincided with a slide in vaccinations since Easter, partly due to a reduced vaccine supply from India while alternatives are yet to be approved. However, the rollout remains above prior targets and weekly vaccinations are still around 3M per week.”
“Regional issues have also resurfaced in recent weeks. Unrest in Northern Ireland over the post-Brexit trade deal may soon be resolved as renewed EU-UK talks progress. Additionally Scottish (and local) elections on 6th May have raised concerns over whether a strong SNP outcome might trigger another ‘once in a lifetime’ Independence referendum. Disruptions to the national, not just the Scottish, economy would set back current recovery prospects and undermine GBP.”
“As GBP softened, GBP/USD found solid support in the 1.3670-00 area. However, rebounds are likely to be limited until there is clarity on the 6th May elections.”
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