Sterling pairs have been trading in narrow ranges throughout the course of the week, with GBPEUR being contained to a near 0.5% range and GBPUSD holding an identical trading range. The quieter economic calendar this week means traders will be looking for any news headlines which will guide prices in the short term.
One source of potential volatility coming up is the Scottish parliament elections, which takes place next week on the 6th May. Rumours are swirling that sterling is currently suppressed by the vote, because of the potentially strong vote for another Scottish independence referendum. Something which Boris Johnson has previously played down, the growing pressures could be something the Prime Minister cannot ignore. With the SNP expected to win, the question will be on if there is a majority vote. Markets do not like uncertainty, and with the vote approaching GBP could be suppressed until next week.
The big event of the week takes place today, with the US Federal Reserve’s interest rate decision released this evening. With rates expected to stay flat for a number of years, the markets will be tracking the following press conference. Any hints to the short to medium terms outlook for the US economy could move GBPUSD in either direction.
Have a great day.
Jack Nicholls, Relationship Manager.
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