Early on Tuesday, GBP/USD is exhibiting signs of weakness despite UK’s manufacturing activity increasing at the fastest pace since mid 1994 as markets await the upcoming BOE’s monetary policy decision and the Scottish parliamentary elections. At the time of writing, GBP/USD is trading at around 1.388.

Data released by Markit earlier today revealed that UK’s manufacturing PMI surged to 60.9 for April from 58.9 in March, coming in higher than the flash reading of 60.7 as well. The rapid pace of expansion in the British manufacturing sector was powered by a strong increase in new orders as well as higher expectations for production to pick up in the coming 12 months.

However, markets are waiting to hear from the BOE later this week, especially to see if the central bank will hint at tapering its asset purchase program or start tightening its monetary policy in response to the economic recovery which has begun. Economists as well as the government anticipate the British economy to post a strong comeback this year from the coronavirus crisis, on the back of robust COVID-19 vaccine rollout as well as pent-up demand among consumers.

Meanwhile, GBP/USD is also trading under pressure as Scotland heads towards elections, amid the possibility that the Scottish National Party (SNP) could win a majority in the parliament. The SNP’s victory could send the region into a second referendum on the issue of Scottish independence and drive up political uncertainties even before the dust on the Brexit chaos has settled.