GBP/USD Forecast: Recovery from critical support, 1.4200 caps

Valeria Bednarik FXStreet

GBP/USD Current price: 1.4171

Brexit and coronavirus-related concerns weighed on the pound.
The UK is expected to report a 2.4% monthly GDP growth for April.
GBP/USD recovered but lost momentum as it approaches the 1.4200 threshold.

The GBP/USD pair fell to 1.4072, its lowest in almost a month, as the pound was hit by Brexit and coronavirus-related headlines. Regarding the first, talks between UK Brexit Minister David Frost and European Commission vice-president Maros Sefcovic to resolve differences over the Brexit deal broke up without a breakthrough on Wednesday. At the same time, speculation mounts that the kingdom will have to delay its planned reopening on June 21 amid the continued increase of new cases.

The pair recovered on the back of a weaker dollar as investors read past higher US inflation. The UK published the May RICS Housing Price Balance, which rose 83%, beating the expected 77%. On Friday, the kingdom will publish April Industrial Production and Gross Domestic Product, the latter foreseen at 2.4% MoM. The country will also publish the Goods Trade Balance for the same month.

GBP/USD short-term technical outlook

The GBP/USD pair pressures a daily high at 1.4173, but its bullish potential is limited. The 4-hour chart shows that the pair is just above its 20 and 100 SMAs, both directionless and converging around 1.4150. Technical indicators recovered from near oversold readings and entered positive territory, but lost directional strength afterwards, now consolidating just above their midlines. The 200 SMA heads firmly higher and acted as dynamic support at around 1.4070.

Support levels: 1.4150 1.4110 1.4070

Resistance levels: 1.4210 1.4250 1.4290

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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