- GBP/USD has been under pressure as Brexit concerns join covid ones.
- The dollar may be poised for a comeback after several days under pressure.
- Friday's four-hour chart is pointing to further falls.
Riots on the streets of Belfast – exactly 100 days after Brexit serve as a stark reminder of the implications of Britain's exit from the EU and its complexities not only for trade but also for peace in Emerald Isle. Frustrations over the terms of the accord in Northern Ireland are only the latest factor to push the pound lower.
Britain is also grappling with a "dry month" of vaccine supplies, exacerbated by the recent debacle over AstraZeneca's jabs. Hesitancy around taking protection against the virus is set to rise after experts found a link between rare blood clots and inoculation. Another downside drive for the pound is profit-taking, which followed several weeks of gains.
The dollar is also playing a major factor in keeping the lid on any GBP/USD recovery. After two days of dovish messages from the Fed, the greenback is making a comeback alongside the increase in bond yields. Federal Reserve Chair Jerome Powell pushed the greenback lower by stating that he is worried about coronavirus infections rather than inflation, pledging to keep the pedal to the metal and keep on printing dollar. However, that effect has faded.
Why? Investors seem to have remembered that Powell's words are not news, just a repeat of previous messages. Moreover, the US economy is still on course to outperform its peers. A bump up in Chinese consumer and producer prices in March may serve as a hint that US inflation may also advance – forcing the Fed to raise rates sooner than later.
All in all, the potent mix of British concerns with a rush to the dollar are exacerbating cable's climbdown.
GBP/USD Technical Analysis
Pound/dollar has been extending its falls after breaking below the uptrend support line, as the four-hour chart is showing. Momentum remains to the downside and the Relative Strength Index is above the 30 level, outside oversold territory.
Overall, bears are in control.
Critical support awaits at 1.3670, which was March's low point. It is followed by 1.3610, a cushion from January, and then by the February trough of 1.3565.
Some resistance is at 1.3705, a low point in late March, followed by 1.3780, the weekly high, and then by 1.3920, which worked as support last week.
Bank to the Future: Interest rates return to market center stage
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.
Recommended Content
Editors’ Picks
EUR/USD drops toward 1.0700 after US jobs report
EUR/USD came under renewed bearish pressure in the second half of the day on Friday and declined toward 1.0700. Stronger-than-expected Nonfarm Payrolls (NFP) data helps the US Dollar gather strength ahead of the weekend and forces the pair to stay on the back foot.
GBP/USD extends slide below 1.2450 amid a stronger USD
GBP/USD dropped further and hit fresh daily lows below 1.2450 amid a stronger US dollar. The Greenback remains firm following the release of the US May jobs report. Despite losing almost 100 pips on Friday, GBP/USD is still on track for a weekly gain.
Gold falls below $1,960 as US yields rebound after US jobs data
Gold price turned south and declined below $1,960 on Friday. After the data from the US revealed that Nonfarm Payrolls rose 339,000 in May, the benchmark 10-year US Treasury bond yield gained more than 2% and recovered toward 3.7%, weighing heavily on XAU/USD.
China crypto community picks Ethereum, Arbitrum and BNB Chain as top protocols
Ethereum, Arbitrum and BNB Chain protocols are top picks for the Chinese crypto community, data from a report shows, a possible bullish catalyst for tokens related to these protocols as Hong Kong opens the door of crypto to retail investors.
LULU stock adds 15% on big Wall Street beat
Lululemon Athletica did it again. In something that has become quite predictable, LULU stock sailed 14.9% higher in Friday’s premarket to $377.20 after the prized athleisure brand posted a nearly 15% earnings beat for the first quarter.