GBP/USD Forecast: Coronavirus-related concerns limit pound’s bullish potential
GBP/USD Current price: 1.3680
- UK Retail Sales resulted much worse than expected amid tough lockdown.
- UK coronavirus strain may be up to 30% more deadly, according to early studies.
- GBP/USD retains its bullish potential despite the latest retracement.
The GBP/USD pair retreated on Friday but was able to close the week with gains at 1.3680. The pound was hit by poor UK data, as December Retail Sales were up a modest 0.3% MoM, well below the 1.2% expected. When compared to a year earlier, sales grew 2.9% missing expectations of 4%. Additionally, Public Sector Net Borrowing in the same month increased by more than anticipated to £33.375 billion.
Also, Prime Minister Boris Johnson said that early evidence suggests the UK coronavirus variant may be more deadly, with some studies suggesting it could be up to 30%. The increased transmissibility and a higher death rate somehow anticipate tougher restrictive measures for longer, not only in the UK. The UK has an empty macroeconomic calendar this Monday, with the focus shifting to employment figures to be out on Tuesday.
GBP/USD short-term technical outlook
The GBP/USD pair retains its bullish tone in its daily chart as it continues developing above a bullish 20 SMA, which advances above the longer ones. Technical indicators remain within positive levels but lack directional strength. In the 4-hour chart, the pair is neutral-to-bullish as it’s trading around a bullish 20 SMA while above the larger ones, while technical indicators hover directionless around their midlines.
Support levels: 1.3670 1.3620 1.3585
Resistance levels: 1.3745 1.3790 1.3830
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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.
