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Cable remained close to three-year highs on 1 May after completing a very strong monthly performance in April. Significantly lower political instability in the UK and a generally weak US dollar amid uncertainty over tariffs both helped the pound to gain. Broadly speaking, the pound is less vulnerable to current political and trade issues than many other currencies given that the USA has a fairly large trade surplus with the UK in terms of goods and the British government seems very eager to placate the American administration.
Highs around $1.343 from late last month coincide neatly with September 2024’s peak, so it might be quite difficult for the price to break out above there unless there’s a strong fundamental driver, whether from monetary policy or something else. The main dynamic support is the 50 SMA from Bands which triggered a bounce around 7 April, but in the short term the 20 SMA is also in view as a possible support.
The maturity of the uptrend makes it questionable whether there’ll be a new high in the next few days, especially with important releases coming up next week. Volatility will probably increase significantly around 7-8 May because the Fed and BoE will meet on consecutive days. The probability of a hold by the Fed has been very high for some time but the BoE is expected to call for a single cut.
This article was submitted by Michael Stark, an analyst at Exness.
The opinions in this article are personal to the writer; they do not represent those of Exness. This is not a recommendation to trade.
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