GBP/USD has been under pressure as markets worry about jitters in the global recovery. Uncertainty around the Bank of England and elections in Scotland could keep sterling depressed through Thursday, Yohay Elam, an Analyst at FXStreet, reports.
Nervous traders could keep the pressure on GBP/USD on Tuesday and on Wednesday
“Jerome Powell, Chair of the Federal Reserve, has described the US economic recovery as ‘patchy’. The upswing in the world's largest economy is also running into supply issues. The ISM Manufacturing Purchasing Managers' Index unexpectedly dropped in April, mostly due to price rises and delays in shipments. While these are ‘good problems’ to have, markets are more cautious and money is flowing to the safe-haven dollar.”
“Uncertainty is growing around local and regional elections due on Thursday. Perhaps the most important poll is in Scotland, where the Scottish National Party (SNP) may clinch an absolute majority, bringing the topic of Scottish Independence back on the table. Results will be known only on Friday morning and the pound could suffer until then.”
“Another source of uncertainty is the BoE’s ‘Super Thursday’ event on Thursday as well. Will Governor Andrew Bailey and his colleagues hint they would taper bond buys soon? Given Britain's quick immunization effort, such a move cannot be ruled out. Tapering would be positive for sterling, but nothing is certain until the BOE releases its announcement in two days' time.”
“Support awaits at 1.3855, the daily low, followed by 1.3825, which is where the 200 SMA hits the price. Resistance is at 1.3930, which is the weekly high, and then by 1.3980 and 1.4010.”
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