Who to believe: the press claiming that the Scottish National Party's election victory will lead England to the worst land loss since the loss of American colonies, or the financial markets? For me personally, the answer to this question is obvious. The pound continued to rally despite rumors of a Scottish independence referendum, with a "price takes everything into account" approach suggesting that the event does not intimidate its fans. At least on the investment horizon of one and a half to two years.

Among the main drivers of the strengthening of sterling in 2021 are accelerated vaccination, faith in the opening and rapid growth of the economy, as well as the Bank of England's intention to reduce weekly asset purchases as part of QE. Even though the regulator is trying to convince financial markets that we are not talking about the start of normalization of monetary policy, in fact, it began to make adjustments to it earlier than the Fed and the ECB. By the way, the program of the European Central Bank is the most aggressive.

Dynamics of the scale of asset purchases under QE

By mid-May, 36 million UK citizens had received at least one injection, and 19 million are considered fully vaccinated against COVID-19. Although the country allows up to 12 weeks of break between the first and second injections, the government of Boris Johnson is considering reducing this period amid an increase in the number of cases of infection with a strain of the virus circulating in India.

London wants to fully open the economy by June 21, and this fact strengthens the optimism of businesses and consumers, contributing to the improvement of macro statistics. In March, UK GDP grew by 2.1%, exceeding the forecast of + 0.7%, after a 1.5% QoQ contraction in the first quarter.

UK GDP dynamics

Recently, the markets have forgotten about trade wars, remember little about the pandemic, and are increasingly interested in macroeconomic indicators and the monetary policy of central banks. In this regard, the busy calendar for the UK allows the pound to rightfully claim the role of the most interesting currency of the week by May 21. Releases of data on employment, inflation, retail sales, and business activity will allow the GBP/USD bulls to continue the upward trend, or, on the contrary, push the pair to a correction.

At the height of the recession, it was thought that the American approach to the labor market, with its layoffs and disability benefits, was more flexible than the European approach with its money to keep people in the labor force. The latest statistics on employment in the United States made us doubt this: Americans are not looking for work, since they have enough benefits. Britain is in a winning position, which adds fuel to the GBP/USD rally. If inflation with retail sales and purchasing managers' indices also pleases, the bulls will resume their attacks.

Technically, after a clear working out of the "Expanding Wedge" and "Wolfe Wave" patterns, a combination of the "Three Indians" and 1-2-3 patterns may appear on the daily chart. For this, the pair quotes must fall below 1.4005. Until this happens, I recommend that you stick to the buying strategy with targets at 1.433 and 1.45.

GBP/USD, Daily chart