GBP/USD Forecast: Pound trading heavily on Brexit jitters

Valeria Bednarik FXStreet

GBP/USD Current price: 1.4079

UK employment-related figures were upbeat but fell short of boosting the pound.
Brexit jitters and the lockdown extension undermined demand for sterling.
GBP/USD is comfortable below 1.4100 could extend its slide in the near-term.

The GBP/USD pair fell to a fresh two-month low of 1.4033 but managed to recover some ground ahead of the daily close and settled in the 1.4080 region. UK data was mostly upbeat, as the ILO Unemployment Rate contracted to 4.7% in the three months to April as expected, while the number of people claiming for unemployment benefits decreased by 92.6K in My, much better than the expected increase and the previous -55.8K. Even further, wages were up by more than anticipated.

However, the pound suffered from Brexit jitters and the delayed reopening. According to the latest data, Irish imports from Great Britain fell by over 20% in April, deepening the post-Brexit trend. On Monday, Prime Minister Boris Johnson confirmed that current restrictions would continue until July 19, adding that he thinks there won’t be further delays but didn’t rule out such a negative scenario. On Wednesday, the UK will publish May inflation data, with the annual CPI foreseen at 1.8%.

GBP/USD short-term technical outlook

The GBP/USD pair is technically bearish in the near-term. The 4-hour chart shows that it is developing below all of its moving averages, with the 20 SMA heading lower within the longer ones. Technical indicators have bounced modestly from near oversold readings but lack momentum within negative levels, suggesting absent buying interest.

Support levels: 1.4035 1.3980 1.3940

Resistance levels: 1.4130 1.4180 1.4225

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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