GBP/USD: Sterling wins the first round, PMIs is the next battle to sustain pound gains

GBP/USD is licking its wounds around 1.3850. After succumbing to dollar strength, sterling can recover as upbeat UK data may counter dollar domination, according to FXStreet’s Analyst Yohay Elam.

PMIs and further reactions to proposed tax hikes are set to move markets

“British Retail Sales surged by 5.4% in March, more than triple the early expectations and on top of upward revisions. YoY, the increase is 7.2%. UK shoppers have been out and about after several restrictions were lifted in early March. That allows the pound to recover.” 

“Markit's preliminary Purchasing Managers' Indexes for March are eyed later in the day, with figures for both the services and manufacturing sectors set to remain robust.” 

“The main upside driver for the greenback has come from the White House. While the general media focuses on President Joe Biden's climate commitments, the administration's intent to raise taxes on capital gains for high-earners has rattled markets. The S&P 500 Index dropped nearly 1% and investors sought the safety of the greenback.”

“Investors are concerned about India's worsening covid situation after the nation hit yet a new infections record of over 330,000. The UK's travel ban on flights from the large south-Asian nation has come into effect and worries about global growth are weighing on sentiment.” 

“Support awaits at the daily low of 1.3820, followed closely by 1.38, which capped GBP/USD earlier this month. Some resistance is at 1.3860, the daily high, followed by 1.3885, a swing low from Thursday.”