- GBP / USD is witnessing some selling on Friday and extends the previous day’s pullback from the weekly highs.
- Softer risk sentiment provides a modest boost to the safe-haven USD and puts some pressure on the pair.
- Political noise in the UK and Scottish election risk weighs on the GBP and contributes to selling bias.
The pair GBP/USD has moved lower during the European session on Friday, with the bears now waiting for a sustained break below the round level of 1.3900.
The pair has extended the retracement decline of the previous day, from the week-long highs around the 1.3975 region, and has seen some selling on the last trading day of the week. This marks the first day of negative movement of the previous six and it is due to a modest strength of the US dollar.
As investors looked beyond the pessimistic message from the Fed, the strong rally in US Treasury yields the previous day has helped the USD rebound from the lowest level since February 26.
The British pound has been further pressured by the risk posed by the Scottish elections in the next week. Polls point to a supermajority of pro-independence parties in Scotland’s parliament, which could intensify pressure for a referendum on independence and act as a headwind for sterling.
This adds to the controversy over a deal to finance the UK Prime Minister’s official apartment, Boris Johnson. This, in turn, has largely offset optimism about a strong recovery in the UK, bolstered by the easing of COVID-19 restrictions, and has kept sterling bulls on the defensive.
In the meantime, USD rise is likely to remain limited amid firm expectations that the Fed will keep interest rates near zero for a longer period. This, in turn, makes it prudent to wait for some continuation selling before positioning for a significant decline for the GBP / USD pair.
There is no major economic data release from the UK, leaving GBP / USD at the mercy of USD price dynamics. Later, at the start of the American session, investors could follow the clues of today’s US data, such as March personal income / expense data, the underlying PCE price index and the sentiment index. Michigan Consumer Reviews for April.
GBP / USD technical levels
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