May 17th, 2021
The good news for the UK economy is that today the British people are having many Covid restrictions lifted. Grandparents can hug grandchildren and the pubs are open for indoors drinking! The UK will benefit from the freedom of movement and travel, and of course, let’s not forget all the lockdown savings, people have yet to spend.
However, a note of caution has been sounded over the increase in cases of the Indian variant of Covid. Which the UK Government has said is not a problem if you are fully vaccinated.
The Pound is trying to test resistance at 1.4120 if broken will lead to a retest of last weeks high of 1.4160 as a target, however, it is looking a little tired and overbought. If the GBP finds some momentum and can break up to 1.4160 the next level to look for is 1.4220.
Support for the GBP is going to be found on a dip 1.4060 and in the 1.4020 to 1.4000.
Failing US Bond Yields are helping out the JPY, as inflation worries in the USA are being conveniently forgotten for the time being. In doing so it is keeping resistance intact at 154.40. A break here would then open up a run to 155.00.
Failure to break up will likely see support at 153.80 tested and possibly a deeper correction to 153.20. The most likely outcome is probably range trading in the early part of the week.
The GBP remain below the key pivot point of 1.2740, while below this level another test of 1.2680 is probable. A break of 1.2680 would then open up 1.2620.
However, above 1.2740 again we will see a run to the previous high of 1.2800.
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