GBP/USD Forecast: Reopening doubts undermine demand for the pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3799

The number of new coronavirus cases in the UK continues to rise.
UK data failed to impress, as housing data missed the market’s expectations.
GBP/USD remains stuck around 1.3800 with limited bullish scope.

The GBP/USD pair seesawed between gains and losses but ended the day little changed around the 1.3800 threshold. The pair peaked at 1.3841 during the European session but capitulated on the back of the resurgent dollar’s demand during US trading hours. The greenback surged amid higher demand for US bonds, which in turn pushed yields lower.

Meanwhile, UK data failed to impress, as the country published the June Halifax Price Index, which contracted by 0.5% MoM, missing the market’s expectations. Also, the UK reported over 32K new coronavirus cases, the biggest one-day increase since late January, although there are no news suggesting restrictive measures will be maintained after July 19. The UK calendar will remain light on Thursday, as it will only publish the June RICS Housing Price Balance.

GBP/USD short-term technical outlook

The GBP/USD pair offers a neutral-to-bearish stance in the near-term, with another leg south still likely. The 4-hour chart shows that the upside was capped by a mildly bullish 20 SMA, while the longer ones maintain their bearish slopes above it. Technical indicators head nowhere within negative levels. The pair could recover some ground once above the daily high, although sellers await near the 1.3900 level. The main support is 1.3730, the low set last Friday.

Support levels: 1.3780 1.3730 1.3680

Resistance levels: 1.3840 1.3890 1.3930

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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