GBP/USD bounces 50 pips off post-Westminster-attack lows

Currently, GBP/USD is trading at 1.2464, down -0.11% on the day, having posted a daily high at 1.2508 and low at 1.2424.

UK Parliament shooting update: Police treating incident as terrorism

GBP/USD made a low for the day after the attack on Westminster bridge and UK Parliament when a man drove a four-wheeled vehicle and mowed down several people on the bridge when mounting the pavement before crashing into Parliament. The man was apparently a middle-aged Asian and shot by police after stabbing a police officer. There could be a second man still at large but that is so far unconfirmed as news and mixed updates continue to flood in as being a heavily populated area with a great deal of media and tourism reporting on the incident. Meanwhile, the short squeeze in the pound on yesterday;s CPI met supply at on the 1.25 handle and has since settled back to current levels as we await tomorrow's key retail sales. 

Kit Juckes, an economist at Societe Generale explained the UK inflation data boosted UK nominal rates and yields relative to the global trend, but noted that relative real yields are still an anchor around the pound's legs and getting more so. "The big near-term test for sterling comes with tomorrow's retail sales data. If higher inflation meets softer wage growth and triggers slower consumer spending at the same time as political uncertainty increases, I can't see anything good for sterling, valuation and positions notwithstanding."

GBP/USD levels

Analysts at Commerzbank explained that the near-term outlook for the pound is neutral:

"Sterling based at 1.2110 and reached the seven-month resistance line at 1.2471. Above it sits the 1.2581 February 9 th high which will be in sight once a break above the resistance line has been seen. Only above the 1.2705 February high would allow for further strength to the 1.2776 December high to be seen. Between it and 1.2836 lie several Fibonacci retracements and major resistance and we suspect that it will fail there. Where are we wrong? The recent low at 1.2110 is considered to be the last defence for the 1.1988 January low and the bottom of the 5-month range at 1.1919."