The GBP/USD price surged on Monday after the relatively strong housing data from the United Kingdom and after the Scottish election. The pair surged to 1.4157, which was the highest level in the past two months. It has spiked by more than 1.50% since Friday last week.
British pound spikes
What happened: There are three main catalysts driving the GBP/USD today. First, investors are still reacting to the recent weak US non-farm payroll numbers. These numbers have pushed the US dollar to a multi-week low.
Second, it is rising after the strong US housing data. According to Halifax, the house price index rose to a five year high of 1.5%. In other words, the average house price has seen its price increase by more than 20,000 pounds since the pandemic started. The strong number points to the fact that the Bank of England (BOE) will likely start tapering its asset purchases in the next few months.
Finally, the pair rose after the latest Scottish parliamentary election. The Scottish National Party failed to form a majority in parliament. However, the party will get support from Greens, who scooped eight seats.
Why it matters: Nicola Sturgeon’s party has been agitating for a referendum on whether to leave the UK union for a while. In 2015, she led a referendum, in which many people voted to remain. However, because of Brexit, many young people have become opposed to the Union. Furthermore, most people in Scotland voted to remain in the European Union. Therefore, if there is a successful referendum, the GBP/USD would be vulnerable.
Later this week, the GBP/USD will be moved by the latest US inflation and retail sales data and UK GDP numbers set for Wednesday.
GBP/USD technical forecast
The four-hour chart shows that the GBP/USD pair has managed to recover after lagging in the past few weeks. The pair is approaching its YTD high of 1.4240. It is also above the ascending trendline that is shown in black. The upswing is also being supported by the 25-day and 15-day moving averages and oscillators like the MACD and Stochastic. Therefore, the pair will likely keep rising as bulls attempt to move above the YTD high of 1.4240.