- GBP / USD is recovering from the 1.3800 level, a two-week lows, amid modest USD weakness.
- With the Fed’s pessimistic expectations, market optimism weighs on the USD and continues to support the upward move in the pair.
- UK political uncertainty could prevent bulls from opening aggressive positions and limiting any further gains.
The pair GBP/USD it has recovered around 50 pips during the European session on Monday and has risen to new daily highs, around the region of 1.3850 in the last hour.
The pair has rebounded well from the 1.3800 level, at a two-week lows hit earlier this Monday, and has now recovered some of the heavy losses the day before. The rebound is due exclusively to the emergence of some sales around the US dollarAlthough political nervousness in the UK could limit the rise of the GBP / USD pair.
The US dollar has struggled to capitalize on the positive rally last week from the lowest level since Feb. 26 amid expectations that the Fed will keep interest rates low for a longer period. This, along with the underlying bullish sentiment in financial markets, has weighed even more on the safe-haven US dollar.
In the meantime, the risk posed by this week’s Scottish elections could prevent bullish investors from opening aggressive positions around the GBP / USD pair. Polls point to a supermajority of pro-independence parties in Scotland’s parliament, which could intensify pressure on British Prime Minister Boris Johnson to allow a second independence referendum.
Investors too they might prefer to wait on the sidelines before the latest Bank of England monetary policy update on Thursday. Also, UK banks are closed in commemoration of May Day. This makes it prudent to wait for some subsequent buying before positioning for any significant rally amid the absence of relevant UK economic releases on Monday.
Later, at the start of the American session today, investors could follow the signs of the release of the US ISM Manufacturing PMI. Apart from this, a scheduled speech by Fed Chairman Jerome Powell will influence the dynamics. the price of the USD, which could give some momentum to the GBP / USD pair and allow investors to take advantage of some short-term opportunities.
GBP / USD technical levels
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