GBP/USD and the GBP crosses are expected to trade sideways this week, with GBP/USD staying close to the 1.39 level ahead of Thursday’s meeting of the Bank of England’s monetary policy committee. Given the UK economic recovery after the pandemic-induced slump, traders will be watching out for any decision by the MPC on tapering its huge economic stimulus measures.
That would be positive for GBP, but traders will also be watching out for the results of the UK local, regional, and mayoral elections the same day, although the results will take time to trickle out. An overall majority for the pro-independence Scottish National Party could weaken the Pound as it would raise the chances of Scotland breaking away from the UK, although not for a long time.
The offshore Chinese Yuan halted an eight-month rally against the US Dollar and retreated February-March 2021 as optimism surrounding a robust economic recovery and smooth vaccine rollouts for the US buoyed the Greenback. The approval of a US$1.9 trillion Corvid relief package favoured by the Biden administration further boosted reflation hopes. The resulting rapid rise in longer-dated Treasury yields led to a rebound in the US Dollar Index (DXY) from a two-and-half-year low.
Year-to-date, USD has strengthened against most Asian emerging market currencies such as IDR, THB, KRW, SGD, and CNH. The seemingly “one-way” trajectory of USD/CNH appears to be under threat by a faster-than-expected economic recovery in the US as well as uncertainties surrounding Chinese growth.
XE Market Analysis Europe – 04th May 2021
GBP>EUR – 1.1542
GBP>USD – 1.3870
EUR>USD – 1.2018
GBP>CAD – 1.7077
GBP>AUD – 1.7959
GBP>SEK – 11.735
GBP>AED – 5.0955
GBP>HKD – 10.772
GBP>ZAR – 20.074
GBP>CHF – 1.2683
· NZD Employment Change(Q1)
· NZD Unemployment Rate(Q1)
- EUR/USD Forecast: Bear attack on 1.20 looks imminent as markets see glass half-empty
- GBP/USD falls under 1.39 on dollar strength, Brexit concerns
- Forex Today: Dollar rebounds as markets turn cautious, cryptos, gold, oil all retreat
- Scottish elections to have a marginal impact on GBP as the referendum is still years away – ING
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