OCBC’s Christopher Wong says British Pound (GBP) has held up despite UK political noise, with local elections pointing to a more fragmented landscape and a medium-term political-risk premium. He sees GBP trading with a modest political-risk discount near term, but driven mainly by US Dollar (USD) direction and Bank of England (BoE) repricing, with technicals showing mixed signals and key resistance around 1.37.
Sterling balances politics and rate repricing
“UK local election results pointed to a more fragmented political landscape. Labour took heavy losses, Reform UK was the standout winner in English councils, the Conservatives also remained under pressure, while the Greens/Lib Dems picked up support in parts of the country. In Wales, Plaid Cymru’s win ended Labour’s long dominance, with Reform also performing strongly.”
“For GBP, the immediate damage looks contained as there is no clear leadership or fiscal shock yet. But the results do add to the medium term political risk premium, especially if poor Labour showing revive concerns over fiscal slippage. In the interim, GBP is likely to trade with a modest political-risk discount, but the bigger drivers remain USD direction and BoE repricing.”
“GBP traded better bid for the week. Last at 1.3630 levels. Weekly momentum is mild bullish while RSI rose slightly. Technical readings are mixed with momentum/oscillator indicating upside risk while chart pattern saw a potential hanging man formation, typically associated with bearish reversal.”
“We continue to watch price action. Resistance at 1.37 levels (76.4% fibo retracement of 2026 high to low). Support at 1.3540 (21 DMA), 1.3510 (50% fibo) and 1.3480. “
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
