- GBP/USD has been under pressure after rate hike talk from Treasury Secretary Yellen.
- Sterling awaits the BOE and Scotland elections on Thursday.
- US figures are set to rock the dollar on Wednesday.
- The four-hour chart is painting a balanced picture for the currency pair.
Another independence referendum in Scotland? The question is high on the agenda as opinion polls show secessionist parties are on the verge of clinching a majority in Thursday's elections. That could cause jitters for the pound, with traders also eyeing regional and local polls across England.
The pound's lack of willingness to move can also be attributed to the Bank of England's "Super Thursday" rate decision. Will Governor Andrew Bailey signal that a reduction in the BOE's bond-buying scheme? New forecasts will likely point to stronger growth as Britain emerges from the COVID-19 crisis, but much of that might already be in the price.
Tensions toward these events do not mean cable cannot move. First, last-minute opinion polls and BOE speculation could rock the pound. Moreover, the dollar has reasons to rock and roll.
Traders are still digesting Treasury Secretary Janet Yellen's comments about the potential for rate hikes if inflation continues rising. As the former Chair of the Federal Reserve, Yellen carries more clout than her predecessors in the Treasury. While she later retracted her comments and insisted that the Fed is independent – her successor Jerome Powell rejects raising rates nor tapering bond-buys – markets continue shivering. For the dollar, it means more upward pressure.
However, investors have little time to rest as top-tier US figures are due out on Wednesday. ADP's employment figures for the private sector are set to show a pick-up in private-sector hiring in April. Markets are set to respond despite the weaker correlation between the payroll firm's statistics and official ones.
The ISM Services Purchasing Managers' Index is forecast to remain on high ground, pointing to a boom in America's largest sector. However, after the Manufacturing PMI dropped – apparently due to bottlenecks and rising prices – a drop cannot be ruled out.
Low expectations could turn into a positive surprise and boost the dollar, but that is uncertain. There is higher certainty about an uptick in volatility.
GBP/USD Technical Analysis
Pound/dollar is battling the 50 Simple Moving Average on the four-hour chart, but trades above the 100 and 200 SMA. On the other hand, momentum remains to the downside. All in all, the picture is mixed.
Support awaits at 1.3840, which was a swing low on Tuesday, and it is followed by 1.38, the weekly low. Further down, 1.3750 and 1.3720 await the currency pair.
Resistance is at 1.3930, which is the daily peak, followed by 1.3980 and the all-important 1.4010 level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.