GBP/USD Forecast: Variant fears may end holiday calm and send sterling down

  • GBP/USD has been drifting below 1.42 in thin holiday trading. 
  • Fears of COVID-19 variants and robust US data could push the pair lower.
  • Contrary to fundamentals, Monday's four-hour chart is pointing higher. 

Enjoying the spring? The haze in London may keep British traders at home on a bank holiday, and that is not necessarily pound-positive. At the moment, markets are calm amid the long weekend in both the US and the UK, and after Friday's choppy trading, triggered by end-of-month adjustment. 

Now that money managers have finished adjusting the portfolios, it is time to reexamine the fundamentals. People residing in the UK may enjoy the long weekend at home and in several European countries – but not in France nor Germany, where they are required to quarantine. These restrictions serve as a reminder of the B.1.167.2 variant. Sterling is on the back foot due to these fears.

Apart from vacations, it may also halt the next and last phase of Britain's reopening due on June 21. Health experts have been calling on the government to react to the strain first identified in India by postponing this loosening. In the meantime, authorities have settled for accelerating the vaccination campaign. 

On the other side of the pond, Americans are also benefiting from a long weekend, and they have reasons to be cheerful about the economy. Perhaps it is even too much. Core Personal Consumption Expenditure (Core PCE) – the Federal Reserve's preferred measure of inflation –hit 3.1% in April.

Apart from exceeding estimates, it is also significantly above the bank's 2% target and may cause officials to rethink their accommodative policies. The specter of a rate hike is supporting the dollar

Pound/dollar is already edging lower on Monday. How far can it go?

GBP/USD Technical Analysis

As mentioned earlier, the charts paint a brighter picture. Momentum on the four-hour chart is to the upside and despite the downdrift, cable is holding above the 50 Simple Moving Average. All in all, bulls have the upper hand.

Some support awaits at 1.4140, which was a swing low last week. It is followed by 1.4090, and then by 1.4010, the former double-top.

Some resistance is at 1.4210, a peak from last week, and then by 1.4220 and by the 2021 peak of 1.4240. 


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.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD clings to recovery gains above 1.1350 after EU inflation data

EUR/USD gained traction and climbed to its highest level in more than 10 days above 1.1360 amid the broad-based selling pressure surrounding the greenback. The data from the euro area showed that the annual CPI jumped to 4.9% in November from 4.1% in October, helping the shared currency preserve its strength.


GBP/USD advances to mid-1.3300s on renewed dollar weakness

GBP/USD gathered bullish momentum during the European trading hours and climbed to 1.3350 area as the greenback remains under selling pressure amid slumping US Treasury bond yields. Investors await FOMC Chairman Powell's testimony.


Gold eyes $1,800 and $1,806 on road to recovery

The precious metal has staged a decent comeback, as bulls look to recapture the $1,800 mark amid a revival of the Omicron covid variant fears. A flight to safety theme remains in vogue killing the demand for the yields.

Gold News

XRP price on edge of cliff as Ripple faces imminent collapse

XRP price followed the rest of the cryptocurrency market lower over the weekend. The US Thanksgiving holiday gave cryptocurrency traders and investors some early Black Friday deals, but downside risks remain.

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!