- GBP/USD seems to have set near-term bottom around 1.3300.
- Recovery could extend toward 1.3400 in case buyers manage to claim 1.3360.
- UK doesn't think tighter rules will be needed to combat the new coronavirus variant.
GBP/USD has recovered modestly after dipping below 1.3300 ahead of the weekend and looks to extend its technical correction toward 1.3400.
On Friday, the risk-averse market environment made it difficult for the British pound to find demand. However, the sharp decline witnessed in the US Treasury bond yields weighed on the greenback and helped GBP/USD limit its losses.
Although the dollar is staying resilient against its major rivals at the start of the week, GBP/USD continues to edge higher on improving risk sentiment.
Over the weekend, British Health Secretary Sajid Javid said that they were "nowhere near" imposing social distancing rules after several cases of the highly-mutated coronavirus variant Omicron were reported in the UK. Javid further announced that face masks will be mandatory in shops and public transports from Tuesday. On Monday, the junior UK health minister Edward Argar said that they don't expect rules to be tightened further in the next three weeks.
The US economic docket won't be featuring any high-tier data releases in the remainder of the day and investors will keep a close eye on headlines surrounding the coronavirus variant. So far, it doesn't seem like that the Fed's policy outlook will be altered by the new variant but market participants will keep a close eye on comments from FOMC officials before the blackout period starts on Saturday.
GBP/USD Technical Analysis
On the upside, GBP/USD is facing static resistance at 1.3360. In case a four-hour candle closes above that level, buyers could target 1.3400 (psychological level, 50-period SMA on the four-hour chart) and 1.3430 (100-period SMA).
Supports are located at 1.3320 (static level, 20-period SMA), 1.3300 (psychological level) and 1.3280 (2021-low).
In the meantime, the Relative Strength Index (RSI) İndicator is edging higher toward 50, suggesting that sellers are showing no interest for the time being.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.