GBP/USD: Fears of COVID-19 variants and robust US data to push cable lower
|At the moment, markets are calm amid the long weekend in both the US and the UK, and after Friday's choppy trading, triggered by end-of-month adjustment. But fears of COVID-19 variants may end holiday calm and send sterling down, FXStreet’s Analyst Yohay Elam briefs.
GBP/USD is already edging lower on Monday. How far can it go?
“People residing in the UK may enjoy the long weekend at home and in several European countries – but not in France nor Germany, where they are required to quarantine. These restrictions serve as a reminder of the B.1.167.2 variant. Sterling is on the back foot due to these fears.”
“Americans are also benefiting from a long weekend, and they have reasons to be cheerful about the economy. Core Personal Consumption Expenditure (Core PCE) – the Federal Reserve's preferred measure of inflation – hit 3.1% in April. Apart from exceeding estimates, it is also significantly above the bank's 2% target and may cause officials to rethink their accommodative policies. The specter of a rate hike is supporting the dollar.”
“Some support awaits at 1.4140, which was a swing low last week. It is followed by 1.4090, and then by 1.4010, the former double-top.”
“Some resistance is at 1.4210, a peak from last week, and then by 1.4220 and by the 2021 peak of 1.4240.”
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