GBP/USD: Licks its wounds above 1.3800 amid UK political jitters, Brexit woes

• GBP/USD bounces off intraday low but fails to overcome the heaviest drop in two months flashed the previous day.
• UK PM Johnson will be pressured for second Scottish Independence referendum if SNP wins Holyrood elections on Thursday.
• UK’s Raab renews concerns over EU Ambassador, signals G7 talks against Russia.
• US PMIs, stimulus chatters will be the key, covid updates may entertain traders as well.

GBP/USD picks up bids around 1.3825, reverses early Asian losses, while heading into Monday’s London open. Although the coronavirus (COVID-19) optimism keeps the British traders hopeful, the broad US dollar strength keeps the cable pressured amid a quiet session.

In his latest comments, UK’s Foreign Secretary Dominic Raab has urged, per The Guardian, the British public to keep their resolutions for the “last lap” of the fight against coronavirus. The British diplomat also said, “The Group of Seven richest countries (G7) will look at a proposal to build a rapid response mechanism to counter Russian propaganda and disinformation,” per Reuters. It was said by the UK’s Rabb that Britain has not made a final decision on whether to grant the European Union's ambassador in London, Joao Vale de Almeida, full diplomatic status.

Elsewhere, The Independent came out with the poll suggesting  UK PM Boris Johnson is facing intense pressure to allow a second Scottish independence referendum if the SNP wins a majority at Holyrood on Thursday. Additional details, conveyed by Reuters said, “The poll also suggested that Mr. Johnson would be heavily expected to win another referendum. Just 19 percent said Scottish independence would be positive for the UK, while 41 percent believe it would be negative.”

On a different page, the tussle between the European Union (EU) and the UK over Brexit remains tight amid allegations that the bloc is taking comfort in how much the UK has lost, per the UK Express.

It’s worth mentioning that US Treasury Secretary Janet Yellen’s push for President Joe Biden’s stimulus and ire over China by the US, the UK and recently by New Zealand seems to offer mixed support to the stock futures as they print mild gains by the press time. Against this backdrop, the US dollar index (DXY) stays firmer after rallying heaviest in over a month on Friday.

Looking forward, UK politics and Brexit updates, not to forget the covid headlines, may offer intermediate moves ahead of the US PMIs for April. Also important will be how the US traders respond to Yellen’s push and likely upbeat data.

Read: US Purchasing Managers’ Index April Manufacturing Preview: Let the good times roll

Technical analysis

Unless crossing the 21-day SMA level of 1.3842 on a daily closing basis, GBP/USD sellers may keep the 1.3766 mark, comprising 100-day SMA, on their radar.