GBP/USD: UK elections to provide relief for sterling, defying NFP impact

GBP/USD has been drifting higher as Conservatives have come on top in a by-election outweighing Nonfarm Payrolls impact. Which force is stronger, UK politics or the US economy? While the NFP causes jitters, sterling could still come on top, FXStreet’s Analyst Yohay Elam briefs. 

See: GBP/USD to surge above 1.40 on a soft NFP reading – TDS

UK elections favor the bulls

“Hartlepool is breaking the typical pre-Nonfarm Payrolls silence. Prime Minister Boris Johnson's Conservatives have won a by-election for the Northern seat, defeating the opposition Labour Party in its heartland. Such a victory provides some political calm.”

“Speculation about Scotland's elections is set to increase. The pro-independence Scottish National Party (SNP) is close to winning an absolute majority, paving the road for another clash with London over a new referendum. However, the sweep toward the ruling Tories south of the border may imply a pro-unionist majority up north. That would boost sterling. Investors prefer political stability over drama, and at least the standoff in Jersey seems to wane off.”

“All eyes are on April's Nonfarm Payrolls figures. The US is expected to have gained nearly one million jobs last month amid a rapid recovery. Figures leading to the publication were somewhat disappointing, but the fact that President Joe Biden summoned a press conference for after the release may imply the data is strong. Robust figures could boost the dollar.”

“Some resistance is at the weekly high of 1.3940, followed by 1.39780, last week's peak, and then by 1.4010.” 

“Support is at 1.3860, Thursday's swing low, and then by 1.3825 and 1.38.”