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May 05 - 10:55 PM

GBP/USD - COMMENT-Amid All The Noise, Sterling's Range May Hold

By Andrew M Spencer  —  May 05 - 08:51 PM

The pound is heading into a period of intense event risk, but unless there is a major surprise, the current trading range could easily survive.

The Bank of England is expected to acknowledge the much improved economic outlook on Thursday, but leave rates unchanged.
Some believe the BOE may slow the pace of bond buying, but with lingering Brexit friction and the impending end of job support measures, the bank is unlikely to undermine confidence in the economic recovery, or shock markets nL8N2MS7JE.

Thursday's elections in Scotland are seen as a proxy for another independence referendum, which is significant longer term, but unlikely to impact sterling short term.
Polls are too close to call a resultnL1N2MS07K.

A by-election in Hartlepool and a swathe of local UK elections will be interesting, but should have little impact on the pound unless there is an unexpected major swing against the Conservative government nL8N2MS2JR.

Charts show a well-defined 1.3800-1.4020 range in place since mid-April. Resistance above 1.4000 has been well tested and capped since late February. The 1.4018 upper 21-day Bollinger band is a good indicator of an overbought market, and 1.4022 is 61.8% of the 2021 fall.The 1.3799 support, 61.8% of the April bounce, was validated on Friday and Monday.

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Source:
Refinitiv IFR Research/Market Commentary

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