GBP/USD Forecast: Brexit tensions and reopening delays to hit the pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.4104

British PM Johnson expressed “serious concern” about the spread of the Delta variant.
European leaders pressured Johnson to fully implement the Brexit Withdrawal Agreement.
GBP/USD at risk of falling further, mainly on a break below 1.4070.

The GBP/USD pair edged lower on Friday but held above the weekly low at 1.4072 and settled a few pips above the 1.4100 mark. Broad dollar’s strength coupled with softer-than-anticipated UK data to send the pair lower, exacerbated by Brexit and coronavirus jitters. The kingdom published April Industrial Production, which contracted by 1.3% MoM and Manufacturing Production for the same month, which was down by 0.3%. The monthly Gross Domestic Product increased by 2.3%, below the 2.4% expected.

On Friday, market talks suggested that the UK government will likely delay easing lockdown restriction to July 19, initially scheduled for June 21. British Prime Minister Boris Johnson expressed “serious concern” about the spread of the coronavirus Delta variant on Saturday, supporting Friday’s headlines.

The weekend G7 summit saw European leaders pushing UK Johnson to fully implement the Brexit Withdrawal Agreement. Tensions persist around Britain´s desire to alter the protocol that imposed checks on British goods entering Northern Ireland.

GBP/USD short-term technical outlook

The GBP/USD pair may fall further at the weekly opening amid discouraging UK fundamental news. From a technical point of view, the daily chart offers a neutral-to-bearish stance, as it keeps hovering around a flat 20 SMA, while technical indicators turned mildly lower around their midlines. In the near-term, and according to the 4-hour chart, the risk is skewed to the downside, although without confirming another leg south. The pair is below its 20 and 100 SMAs, but above a bullish 200 SMA, while technical indicators stand within negative levels, the Momentum advancing and the RSI flat at 41. Bears would have better chances on a break below 1.4072, the weekly low.

Support levels: 1.4070 1.4020 1.3970

Resistance levels: 1.4130 1.4180 1.4225

View Live Chart for the GBP/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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