- GBP/USD has been struggling to recover from the Fed-fueled dollar storm.
- Weak UK retail sales and covid's rapid spread have been weighing on sterling.
- Friday's four-hour chart is showing that cable is moderately oversold.
When will "Freddom Day" come? That is a question many Brits are asking themselves after the government postponed the lifting of the last restrictions to July 19 – but reportedly considers bringing it forward to July 5. However, such hopes will likely be dashed.
Over 11,000 new COVID-19 cases were reported on Thursday in Britain, the highest since mid-February. The rapid spread of the Delta variant triggered the postponement and also pushed the government to offer vaccines to all those 18 and older.
As this strain, first identified in India, seems to infect those with only one dose in greater proportions than other variants, the UK is also rushing to provide second shots quickly. The efforts are set to succeed, but not in the short-term. The specter of extended restrictions has been weighing on sterling and will likely continue.
The pound suffered another blow from disappointing UK Retail Sales figures for May, which showed a drop of 1.4%, contrary to an increase that economist had projected. After upbeat job and inflation figures from Britain, these consumption statistics take one of sterling\s sole supporting points. The data is now downbeat as well.
GBP/USD also continues suffering from the Federal Reserve's fallout. Investors continue digesting the Fed's intention to debate reducing bond buys and bringing forward rate hikes. Fed Chair Jerome Powell said the US economy is growing faster than expected and that inflation is higher and could persist. This is an abrupt change from the bank's previous insistence that price rises are transitory.
Where next for markets after the Fed shocker
The greenback has been storming the board for over 36 hours and a correction seems overdue. However, the pound is poorly positioned to take advantage of any such dollar correction.
GBP/USD Technical Analysis
Pound/dollar is suffering from downside momentum on the four-hour chart and trades well below the 50, 100 and 200 simple moving averages. While the Relative Strength Index is below 30, it has not fallen too deep. Any small upswing could send the RSI above 30, thus exiting oversold conditions and allowing for a fresh dip.
Support is at the new low of 1.3955, followed by 1.3830, a cushion from May. Further down, 1.38 and 1.3770 are eyed.
Resistance awaits at 1.3945, the daily high, and then by 13975 and 1.4010, the latter working as support last month.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD drops below 1.0800 ahead of key US jobs data
EUR/USD is dropping below 1.0800 in the European session on Wednesday. The pair is dragged by a renewed uptick in the US Dollar, as markets trade with caution ahead of a busy EU and US economic docket. US ADP is the key event risk.
GBP/USD battles 1.2600, with eyes on US ADP data
GBP/USD is trading close to 1.2600, snapping a two-day losing streak in European trading on Wednesday. The modest US Dollar decline acts as a tailwind for the pair but the Pound Sterling struggles amid a cautious market mood. US jobs data awaited.
Gold finds buyers near $2,020, awaits US ADP jobs data
Gold is finding a floor near $2,020 early Wednesday, snapping a two-day correction from all-time highs of $2,144 set on Monday. XAU/USD price capitalizes on a broad US Dollar retreat, as Greenback buyers take a breather following this week’s upswing and ahead of the top-tier US ADP Employment Change data.
Bitcoin-based meme coin ORDI price action wobbles after 1,100% rally
The Bitcoin-based BRC-20 meme coin, which had people confused as being an actual valuable token, is now slowly creeping up to that status. ORDI price rise over the past couple of days has been astonishing, and with BTC driving the price and crossing $44,000, ORDI is also gaining rapidly. But not for long.
The Dollar is struggling to trend
For the last three trading sessions, the dollar index has been crossing up and down the 200-day moving average every day. All in all, the flirting with this level has been going on for more than three weeks, during which neither bulls nor bears were able to form a stable trend.