GBP/USD: Britain's political issues to limit sterling gains – Westpac

FXStreet Insights Team FXStreet

Easing of covid restrictions is coinciding with a rebound in GBP/USD but political uncertainty into the May 6th regional elections should cap GBP gains, analysts at Westpac appraise.

See: GBP/USD set to rally past the March high at 1.4018 – Commerzbank

Attention on BoE policy meeting and local and regional elections on 6th May

“Recent data underscored potential for a consumer-led recovery that more hawkish MPC members (Haldane and, less overtly, Broadbent and Bailey) have pointed to as potentially triggering a rip-roaring recovery. This will more than offset March’s benign inflation data. BoE is now likely to be confident in its current policy settings being appropriate until the recovery is assured.”

“Local and regional elections on May 6 pose material risks to the UK. Protest votes against Johnson’s Govt. would be unlikely to have any significant impact given its parliamentary majority, but it may increase pressure on Johnson given recent accusations of misconduct. More importantly for GBP is the risk of a sweeping win for SNP in Scotland and calls for another independence referendum.”

“GBP/USD is likely to remain within its recent effective 1.38-1.42 range until the 6th May.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.