GBP/USD Forecast: Upside looks capped by 1.4000 so far

GBP/USD flirts with the 1.3900 neighbourhood on Friday.
The pound remains under pressure following the BoE event.
UK’s GfK Consumer Confidence came in at -9 in June.

Pablo Piovano FXStreet

The sterling extends the recent bearish shift, as investors continue to assess the BoE monetary policy meeting. In fact, GBP/USD recedes from weekly peaks around the psychological 1.4000 zone after the “Old Lady” caught markets off guard and delivered a dovish message at its event on Thursday.

In fact, Cable sheds around a cent after the central bank sounded unexpectedly cautious regarding the timing of the start of a tightening cycle.

In addition, investors remain vigilant on the progress of the pandemic in the UK – particularly the developments around the Delta variant – and its direct impact on when the government will announce the long-waited return to the life as we knew it.

On the not-so-auspicious front for the quid still emerges the omnipresent Brexit issue along with speculations of a EU-UK trade war, which regurgitated in past sessions.

Beyond 1.4000 there are minor hurdles at the 50-day and 20-day SMAs, at 1.4032 and 1.4052, respectively. Further north, there are no relevant resistance levels until the so far 2021 highs in the mid-1.4200s (June 1). If sellers regain control of the sentiment, recent lows in the 1.3800 area are forecast to hold the initial test. Very near-term price action in Cable is expected to track key data releases in the US calendar, all due later in the NA session.

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Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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