GBP/USD: Political uncertainty in the UK to keep sterling under pressure

GBP/USD has been attempting recovery as US yields ease. Is this rise a cable selling opportunity? Boris' problems and US economic strength may trigger more falls, according to FXStreet’s Analyst Yohay Elam.

See: GBP/USD set to ignore Scottish elections and retest the 1.40 mark – ING

Political uncertainty in the UK and a sizzling hot US economy may turn GBP/USD back down

“The vaccine and stimulus recovery is causing the economy to heat up, but perhaps even to push inflation higher? While Federal Reserve Chair Jerome Powell made his best efforts to say price rises are temporary, his colleague Robert Kaplan wants the bank to signal less bond-buying in the near future. That would boost the dollar.” 

“Prime Minister Boris Johnson remains under pressure after reportedly asking Conservative Party donors to fund the redecoration of his Downing Street residence. That may hurt the government's ability to manage the exit from the crisis.”

“The most consequential vote is in Scotland, where the Scottish National Party aims to achieve an absolute majority in Holyrood, allowing for a fresh push for independence. A fresh row within the UK would add to unresolved issues around Brexit.” 

“Support is at 1.3820, a swing low from late April. It is followed by 1.38 and then by 1.3750. Resistance awaits at 1.3860, a cushion from last week, followed by 1.3930 and 1.3980.”