Join our community of traders FOR FREE!

  • Learn
  • Improve yourself
  • Get Rewards
Learn More

GBP/USD extended Friday gains and hit a fresh 11-week high on Monday, with market players’ focus being on the UK economic recovery rather than the possibility of another referendum on independence in Scotland.

Pro-independence parties won a majority in Scottish parliament over the weekend, which paved the way for a political, legal and constitutional battle with British PM Boris Johnson over the future of the United Kingdom.

Yet, the Sterling’s appreciation was due more to a broadly weaker US Dollar, according to analysts.

“The USD is in retreat and the UK economic recovery is turning for the better,” National Australia Bank strategist Gavin Friend wrote in a report, cited by Reuters.

An independence vote is “a long way down the road, and in our view not something to sustainably affect GBP right now,” Friend noted, while adding he expects GBP/USD to appreciate to 1.4500 by the end of June.

The US Dollar extended losses against a basket of six major peers and hit a more than two-month trough on Monday, after considerably weaker-than-anticipated US payrolls data cooled investor expectations of a rate hike by the Federal Reserve and shifted the focus to CPI inflation numbers due out on Wednesday.

Employers in all sectors of US economy, excluding the farming industry, added 266,000 new jobs in April, or well below expectations of 978,000 job growth. At the same time, the rate of unemployment rose to 6.1% in April from 6.0% in March, confounding expectations of a drop to 5.8%.

“The USD’s choppy downtrend can continue this week,” Commonwealth Bank of Australia strategist Kim Mundy wrote in an investor note.

“The unexpected slow recovery in the U.S. labour market reinforces the FOMC’s patient approach to monetary policy,” Mundy noted, and “the improving global economic outlook is a medium-term weight on the USD.”

Federal Reserve Chair Jerome Powell had previously said that US labor market was still far from where it needs to be in order to begin discussing monetary policy tightening, while a short-term surge in inflation will probably be temporary.

As of 9:21 GMT on Monday GBP/USD was gaining 0.72% to trade at 1.4087, after earlier touching an intraday high at 1.4096, or its strongest level since February 25th (1.4182). The major currency pair has risen 1.96% so far in May, following another 0.28% gain in April.

Bond Yield Spread

The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, equaled 10.9 basis points (0.109%) as of 8:15 GMT on Monday, down from 12.1 basis points on May 7th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 1.3957
R1 – 1.4034
R2 – 1.4083
R3 – 1.4160
R4 – 1.4238

S1 – 1.3908
S2 – 1.3831
S3 – 1.3783
S4 – 1.3734

TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News

  • Apple shares close higher on Friday, tech giant to open new store in SingaporeApple shares close higher on Friday, tech giant to open new store in Singapore Apple Inc (AAPL) was poised to open its first store in Singapore on the city state’s prime Orchard Road shopping boulevard, Reuters reported. The tech company has already expanded its presence in the Asian Pacific area, with its retail […]
  • AUD/CAD rises to two-week high with RBA minutes in focusAUD/CAD rises to two-week high with RBA minutes in focus The AUD/CAD currency pair traded in proximity to a fresh two-week high of 0.8824 on Monday, as market players shift their focus to the minutes of the Reserve Bank of Australia’s February policy meeting for more insight into the central […]
  • Strong Central Bank Buying Reinforces Gold Price SupportStrong Central Bank Buying Reinforces Gold Price Support Key Moments ING analysts report that central banks significantly increased Gold purchases in February after a quieter January. Net buying was driven by Poland, with ongoing accumulation from China, the Czech Republic, and other […]
  • HSBC: Euro Nears Range Highs as Policy Risks Factor InHSBC: Euro Nears Range Highs as Policy Risks Factor In Key Moments: HSBC Global Research notes that EUR/USD has stayed stable despite EU-US trade uncertainty. The bank believes most US policy risk is already reflected in EUR/USD, which trades above interest rate differentials. […]
  • Forex Market: EUR/GBP daily forecastForex Market: EUR/GBP daily forecast During yesterday’s trading session EUR/GBP traded within the range of 0.7904-0.7917 and closed at 0.7912, gaining 0.05% for the day.At 6:16 GMT today EUR/GBP was up 0.01% for the day to trade at 0.7913. The pair touched a daily high at […]
  • Forex Market: GBP/JPY daily forecastForex Market: GBP/JPY daily forecast During yesterday’s trading session GBP/JPY traded within the range of 172.61-173.34 and closed at 172.99.At 6:54 GMT GBP/JPY traded at 172.92, losing 0.02% for the day. The pair touched a daily low at 172.75 at 5:40 GMT.Fundamental […]