• GBP/USD initially gained but later trimmed gains as uncertainty around UK politics, inflation, and growth weighed on sentiment.
•The pound has made notable gains recently, approaching trend highs near 1.3650, buoyed by optimism surrounding a peaceful resolution in the Middle East.
• Falling energy prices are easing near-term UK inflation expectations, allowing markets to price in a less hawkish Bank of England stance.
• local elections remain the main focus for sterling. A weak showing for Labour is largely expected, limiting the potential for major market surprises.
•However, attention is turning to the odds of a possible leadership change involving Keir Starmer, as any rise in exit speculation could weigh on the pound.
• Immediate resistance is located at 1.3648(38.2%fib), any close above will push the pair towards 1.3708(Feb 11th high)
• Strong support is seen at 1.3533(SMA 20) and break below could take the pair towards 1.3487(50%fib).
Recommendation: Good to buy around 1.3540, with stop loss of 1.3460 and target price of 1.3600.
