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A moderation in vaccinations and political tensions have weighed on GBP/USD but range support at 1.3670-00 has held with scope for range trading rebounds, according to economists at Westpac.

GBP’s pullback is understandable

“GBP recent softness, notably versus EUR, coincided with a slide in vaccinations since Easter, partly due to a reduced vaccine supply from India while alternatives are yet to be approved. However, the rollout remains above prior targets and weekly vaccinations are still around 3M per week.”  

“Regional issues have also resurfaced in recent weeks. Unrest in Northern Ireland over the post-Brexit trade deal may soon be resolved as renewed EU-UK talks progress. Additionally Scottish (and local) elections on 6th May have raised concerns over whether a strong SNP outcome might trigger another ‘once in a lifetime’ Independence referendum. Disruptions to the national, not just the Scottish, economy would set back current recovery prospects and undermine GBP.”  

“As GBP softened, GBP/USD found solid support in the 1.3670-00 area. However, rebounds are likely to be limited until there is clarity on the 6th May elections.”

 

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