GBP/USD Forecast: Dollar’s demand finally taking its toll on the pair

Valeria Bednarik FXStreet

GBP/USD Current price: 1.4045

UK´s chief medical officials recommended downgrading the coronavirus alert level.
US Treasury yields soared mid-US afternoon, pushing the USD higher.
GBP/USD corrects extreme overbought conditions, further declines still likely.

The GBP/USD pair fell in the final hours of US trading, ending the day in the red around 1.4040. The pair bared quite well with the dollar’s demand, but the greenback found strength in soaring US Treasury yields after a 7-year bond auction resulted at 1.19% vs 1.14% ahead of the event. The UK macroeconomic calendar had nothing to offer, preventing the pound from advancing further despite the broad dollar weakens, as the UK currency is largely overbought. On a positive note, UK´s chief medical officials recommended downgrading the coronavirus alert level as pressure on the health system recedes. The UK will publish February Nationwide Housing Prices on Friday, hardly a market mover.

GBP/USD short-term technical outlook

The GBP/USD pair pressures daily lows ahead of the Asian opening and is bearish in the near-term. In the 4-hour chart, it has broken below its 20 SMA, which has turned flat. The longer moving averages continue to head higher, far below the current level. Technical indicators head lower within negative levels, at their lowest in over three weeks, favoring another leg lower in the upcoming sessions.

Support levels: 1.4030 1.3980 1.3940

Resistance levels: 1.4085 1.4140 1.4190

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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