GBP/USD Forecast: Football not coming home, restrictions not going so fast, sterling could suffer

Football is not coming home, it is going to Rome – England's dreams of winning the Euro 2020 football tournament have been shattered after an exhausting final in which Italy won. British traders have woken up tired, but forex never sleeps and sterling is on the move – to the downside. 

"Freedom Day" may be less free than earlier anticipated. While the UK is set to lift a substantial set of restrictions on July 19, the persistent spread of COVID-19 cases has prompted ministers to suggest that wearing masks indoors and other rules will stay intact. Hints of a slower return to normal mean a weaker recovery.

The Delta variant continues raging through Britain, which reported over 30,000 daily cases also over the weekend. The vaccination campaign – which has kept hospitalizations and deaths at lower levels – continues at full speed, with nearly 70% of the population having received at least one jab.

Britain's economic recovery has already slowed down – or at least advanced at a weaker pace than expected. The UK reported an expansion of 0.8% in May, roughly half the early estimates. Jobs, inflation, and other figures are set to be released later this week.

In the US, infections are on the rise as well, with an increase of 60% in coronavirus cases, albeit from a low level. Nevertheless, investors flow to the safe-haven dollar in times of trouble, and if American growth falters, the world will feel it as well. 

See Delta Doom is set to storm America, the dollar could emerge as top dog

The next significant US release is the inflation report for June, which could show some moderation in price rises. 

US Consumer Price Index June Preview: Has inflation peaked?

Overall, GBP/USD has more room to fall – at least on Monday – and not due to football.

GBP/USD Technical Analysis

Pound/dollar has topped the 100 Simple Moving Average on the four-hour chart on Wednesday when the dollar took a breather. It is also trading above the 50 SMA and benefiting from upside momentum. However, the 200 SMA still looms above the currency pair. 

All in all, bulls are in the lead but do not have full control. 

Support awaits at 1.13855, where the 100 SMA hits the price. It is followed by 1.3820, which is the 50 SMA's meeting point with cable's price. The next levels to watch are 1.3790 and 1.3750. 

Resistance is at the daily high of 1.3910, followed by 1.3940, which capped GBP/USD in late June. Further above, the 1.40 level awaits bulls.