Search ForexCrunch

GBP/USD has been attempting recovery amid a calmer market mood but a fresh rise in US yields and concerns about UK tax hikes may keep cable capped, according to FXStreet’s Analyst Yohay Elam.

Key quotes

“Rishi Sunak, Britain’s Chancellor of the Exchequer, is set to present a new budget on Wednesday and pushing up rates that companies pay is high on the agenda, according to hints he made on weekend interviews. Will that make Britain a worse place for doing business? That is something for pound bears may grab on, at least in the short-term.”

“There is room for US yields to rise as the ISM Manufacturing Purchasing Managers’ Index will likely show robust expansion in the industrial sector, and also boost expectations for Friday’s Nonfarm Payrolls.” 

“The Senate is discussing President Joe Biden’s $1.9 trillion covid relief bill. According to reports, Democrats have abandoned their plans to raise the minimum wage, a thorn on the side for several conservative members of the left-leaning party. That paves the way for a more generous package which in turn would raise inflation expectations.” 

“Support awaits at the daily low of 1.3925, followed by strong support at 1.3885, last week’s trough. Further down, 1.2860 and 1.13830 are eyed.”

“Critical resistance awaits a 1.40, which is a psychologically significant level and also the daily high. Moreover, it is closely backed up by the 50 SMA. The next levels to watch are 1.4025, 1.4050 and 1.4090.”