GBP/USD Forecast: Pound set to shine before Sterling takes to the pitch
- GBP/USD has been clinging to 1.38 after Tuesday's dollar storm.
- The Fed's meeting minutes could push the pair higher.
- Wednesday's four-hour chart is painting a mixed picture.
Is it coming home? That is the question on most Brits' minds ahead of England's football semifinal against Denmark later in the day. The match may distract some forex traders away from GBP/USD. UK consumer spending may also get a boost – economists expect Brits to down some 50,000 pints of beer per minute around the game.
Yet not only Manchester City midfielder Raheem Sterling is set to shine but also pound sterling – at least against the dollar. The greenback advanced on Tuesday despite a substantial drop in the ISM Services Purchasing Managers' Index. Signs of a cooldown in the world's largest economy – and the consequent fall in Treasury yields – failed to stop the dollar. Can this last? On Wednesday, the tables may turn against the dollar.
Moreover, the Federal Reserve's meeting minutes from its June decision could also pour cold water on the currency. Back then, the bank made a hawkish tilt, signaling two rate hikes in 2023 and launching the debate on tapering bond buys. Fewer dollars printed mean a stronger currency.
However, the minutes from the Fed meetings tend to soften the message from the original decision. As these protocols are revised until the last minute – eyeing the market reaction – an indication of an open debate or a slow move toward tapering could send the dollar down.
FOMC June Minutes Preview: A view of the Jackson Hole agenda
After the footy and the minutes, perhaps GBP/USD would have room for a hangover. Britain continues suffering from a rapid spread of the Delta covid variant. While UK Prime Minister Boris Johnson announced a bonfire of coronavirus regulations, doubts are creeping about its feasibility.
Overall, cable has room to rise on Wednesday, yet probably without a follow-through.
GBP/USD Technical Analysis
Pound/dollar is benefiting from upside momentum on the four-hour chart, and the pair has been setting higher highs and higher lows. However, it trades below the 50, 100 and 200 simple moving averages. All in all, the picture is mixed.
Support awaits at 1.3775, which is the weekly low. It is followed by 1.3750 and 1.3730.
Resistance is at 1.3820, the daily high, followed by 1.3850, .39 and 1.3935.
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Author
Yohay Elam
FXStreet
Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.
