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May 28 - 09:48 PM

GBP/USD - COMMENT-Stocks Rally Must Extend, Or GBP/USD Is In Trouble

By Andrew M Spencer  —  May 27 - 09:35 PM

PM Johnson has urged the UK to "move on" from the coronavirus lockdown controversy surrounding his aide Cummings, though around 40 Conservative lawmakers have called for his resignation nL8N2D91L5.
A very unusual situation, underlining Cummings' key role as a policy adviser to Johnson.
Cummings is a controversial figure and Johnson may ultimately regret putting his own reputation on the line by saving his job.
Meanwhile Brexit negotiations are going nowhere, increasing the chances of a hard Brexit nL8N2D95E6.
The UK are calling on the EU to break the Brexit impasse, when it was the UK that prioritised sovereignty over an even playing field mid-negotiations, following Johnson's landslide election victory nL8N2D94PI.
UK economic data remains weak and BOE Governor Bailey yesterday flagged clear risks of "a longer and harder recovery" nL8N2D963V.
Thus it is hard to be bullish on sterling at this point.
A lower USD is required to prevent GBP/USD depreciation.
The USD generally benefits from safe-haven flows, so Wall Street's current risk rally must extend for the USD to support cable.
GBP/USD charts show conflicting signals, with little bias.
The May 1.2075 trend low and 1.2359, 50% of the April-May fall, which capped this week are pivotal support and resistance levels.

gbp 2 may 28 Click here

Refinitiv IFR Research/Market Commentary


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