GBP/USD to remain below the 1.40 mark in case of new UK taxes

GBP/USD has been advancing to 1.40 amid a calmer market mood. UK Chancellor Sunak's budget and progress on US stimulus hold the keys to the next moves, Yohay Elam, an Analyst at FXStreet, reports. 

Key quotes

“UK Chancellor of the Exchequer Rishi Sunak is set to extend the government's successful furlough scheme through September, in a step that would boost the economy and is already helping sterling. However, corporation tax rises remain a mystery. If Britain hikes levees on companies, sterling's upside move could stall, while leaving a hole in the budget would allow for further gains”

“The Senate is set to begin debating President Joe Biden's $1.9 covid relief package on Wednesday, and lawmakers are set to strip out or water down some of the measures. If Democrats unite around most parts of the legislation, the dollar could resume its gains, but if the scope falls toward $1 trillion, the greenback could cool down.”

“The ADP jobs report is set to show an increase of 177,000 private-sector positions in February, a moderate increase that would be in line with expectations for Friday's Nonfarm Payrolls. The ISM Services PMI is set to show rapid growth in America's largest sector – and its employment component is also critical for the NFP. The manufacturing PMI smashed estimates.”

“Momentum on the 4-hour chart has turned to the upside, providing ammunition for the bulls, which have also pushed above the 100 Simple Moving Average. On the other hand, the psychological cap of 1.40 looms, and so does the 50 SMA.”