GBP/USD Forecast: Poised to extend slide sub-1.3800

GBP/USD Current price: 1.3843

• Tension with the EU amid Northern Ireland barriers hurt the pound.
• UK Q1 Gross Domestic Product expected to be confirmed at -1.5% QoQ.
• GBP/USD is poised to extend its decline toward the 1.3700 price zone.

The GBP/USD pair returned to its bearish path on Tuesday, ending the day in the 1.3840 price zone after bottoming for the day at 1.3813. The slide was linked to the dollar’s demand rather than UK news. Anyway, coronavirus and Brexit-related headlines keep affecting Sterling. UK Prime Minister Boris Johnson’s spokesman said that the government expects to agree with the EU an extension to the grace period on custom checks on chilled meats heading to Northern Ireland soon.

Data wise, the UK published May Mortgage Approvals, which improved to 87.5K, beating expectations. Consumer Credit in the same month was also better than anticipated, printing at £0.28 billion. On Wednesday, the country will publish the final reading of the first quarter Gross Domestic Product, expected to be confirmed at -1.5%, and Total Business Investment for the same quarter.

GBP/USD short-term technical outlook

The GBP/USD pair is poised to extend its decline in the near-term. The 4-hour chat shows that the 20 SMA heads firmly lower, currently at around 1.3880, below the longer moving averages, which also head south. Technical indicators, in the meantime, have recovered modestly from their daily lows but remain within negative levels, reflecting limited buying interest. A steeper decline seems likely if the pair slides below the 1.3780 price zone, where it bottomed last week.

Support levels: 1.3810 1.3780 1.3730

Resistance levels: 1.3865 1.3905 1.3950

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