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GBP/USD has surged above 1.41, benefiting from dollar weakness and from favorable election results in the UK. In the view of economists at TD Securities, the greenback should remain in a consolidative tone until data suggests that the April’s payrolls was a temporary aberration. If anything, it should redirect focus to currencies where central banks have undergone a ‘hawkish’ pivot to perform vs. the USD. This includes   the pound.

Friday’s soft US jobs reading for April send the USD weaker

“Over a more medium-term horizon, a softer payrolls report should reinforce a broadly consolidative tone in the USD. If anything, it will probably help to redirect focus in currencies where a ‘hawkish’ central bank pivot has already occurred. This includes the GBP after last week’s BoE meeting.”

“GBP has been the day’s best performer today, afte r aste of market-friendly outcomes in local elections were announced. There wasn’t a lot of election risk premium priced in ahead of the event (if any), so it is an open question as to how far GBP’s uptick can run.”  

“Cable has finally been able to make a sustained push above 1.40 for the first time since February, making that threshold now primary support for the foreseeable future.”  

“Looking higher, we do not have a lot of natural attractors until we get to the end-February high at 1.4237. All else equal, that suggests we could be in for a bit of price discovery near-term.”