GBP/USD Forecast: Further restrictions in the UK may hit the pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3583

UK GDP contracted by less than anticipated in November, Industrial Production plunged.
UK PM Boris Johnson announced new travel restrictions starting on Monday.
GBP/USD is at risk of extending its decline in the near-term.

The GBP/USD pair trimmed most of its weekly gains on Friday and settled in the 1.3580 price zone, amid risk-off fueling dollar’s demand. The pound enjoyed some temporal demand after the release of the monthly Gross Domestic Product figure, which came better than expected. According to the official release, the GDP contracted 2.6% in November against the -5.7% forecast. Still, UK data was far from encouraging. Industrial Production in the same month printed at -4.7% YoY, while the Goods Trade Balance posted a deficit of £-16.012 billion.

Meanwhile, the coronavirus pandemic keeps taking its toll on the kingdom, which reported over 55K new cases on Friday. Prime Minister Boris Johnson announced additional restrictive travel measures on Friday, to protect “against the risk of as yet unidentified new strains.” The UK will close all travel corridors starting this Monday, and anyone flying into the country will need to provide a negative coronavirus test.

GBP/USD short-term technical outlook

The daily chart for the GBP/USD pair shows that the latest slump fell short of turning it bearish, as it remains above all of its moving averages, while technical indicators turned lower, but remain above their midlines. The pair completed a pullback to a daily descendant trend line broken last week. In the 4-hour chart, the pair found support around its 100 SMA, currently at 1.3570, but technical indicators maintain their bearish slopes within negative levels, favoring another leg lower in the near-term.

Support levels: 1.3560 1.3510 1.3465

Resistance levels: 1.3615 1.3660 1.3710

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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