GBP/USD Forecast: Sterling scores, pound suffers its own goals (and dollar strength)

GBP/USD remains on the back foot amid weak UK GDP and virus fears.
The US dollar is holding up ahead of a critical NFP hint.
Wednesday's four-hour chart is pointing to further losses for the pair.

Yohay Elam FXStreet

It has been a brilliant night for Sterling – Footballer Raheem Sterling, not the currency. England beat Germany 2:0 in a high-stakes match, thrilling Brits that were glued to their TV sets. However, pound sterling bulls glued to their screens could find little solace in the pair's performance.

The British currency has been suffering from several worries. First, the rapid spread of the Delta coronavirus variant is weighing on sentiment. While the UK will likely ease restrictions on July 19 as planned, concerns about a harsh winter are rising. That dampens the prospects for the economy moving forward.

Warnings from health officials have piled onto the Bank of England's dovish message from last week and the lack of progress in Brexit talks. Moreover, the final read of UK first-quarter Gross Domestic Product came out at -1.6%, worse than expected. A football-driven consumption boost could help, but only in the short run.

GBP/USD is also struggling to cope with dollar strength. Christopher Waller, the latest member to join the Federal Reserve said the bank could ease the foot off the accelerator. His words serve as a reminder of the Fed's hawkish twist.

The focus on Wednesday is on ADP's private-sector jobs report. America's largest payroll firm is expected to show an increase of 600,000 positions in June after reporting a whopping 978,000 in May – the latter figure failed the official Nonfarm Payrolls statistics.

ADP Nonfarm Payrolls Preview: Going contrarian? How to trade this leading indicator

End-of-quarter flows could cause havoc later in the day, and they will likely be compounded with jittery moves ahead of Friday's Nonfarm Payrolls. Updated FXStreet analysis shows how currencies tend to react to such moves.

US June Nonfarm Payrolls Preview: Analyzing major pairs' reaction to NFP surprises

All in all, cable will likely remain on the back foot, despite the footy excitement.

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. The Relative Strength Index (RSI) is above 30, thus outside oversold conditions.

Support awaits at 1.3815, the daily low, followed by 1.3785, June's trough. Further down, 1.3750 is eyed.

Some resistance is at 1.3860, the daily high, and then by 1.3940, which capped the pair earlier in the week. Further above, 1.3975 and 1.40 are eyed.

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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.

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