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.

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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