GBP/USD drops towards 1.4100 as Yellen rescues US dollar after the NFP blow

GBP/USD remains pressured as the US dollar rebounds on taper talks.
Brexit concerns and UK reopening uncertainty hurts the pound.
Cable looks to test falling wedge support on the 4H chart.

Dhwani Mehta FXStreet

GBP/USD is pressured towards the 1.4100, seeing a fresh selling wave in early Europe amid a broad US dollar rebound.

The greenback is showing some signs of life after US Secretary Janet Yellen re-ignited taper talks. Over the weekend, Yellen said that higher interest rates would be a plus for the Fed.

The USD bulls recoup downbeat US NFP-led bruises, as markets turn optimistic about a likely Fed tapering, with Treasury yields heading back towards 1.60%.

On the cable side of the story, investors remain cautious ahead of this week’s EU-UK talks on Northern Ireland (NI) protocol. Meanwhile, US President Joe Biden remains prepared to intervene in the NI issue.

Additionally, growing concerns that the UK may not reopen on June 21 due to rising cases of Indian covid strain collaborates with the additional downside in the spot.

GBP/USD technical outlook

After multiple rejections above 1.4200 in the last week, the spot edges lower while within a falling channel formation on the four-hour chart.

The pair looks to test the channel support at 1.4073 if the 1.4100 cap gives away.

The Relative Strength Index (RSI) is pointing south while below the midline, suggesting deeper declines.

GBP/USD four-hour chart

On the flip side, if the GBP bulls fight back control and recapture the bearish 21-simple moving average (SMA) at 1.4145, then the buyers could regain momentum towards 1.4200.

However, the technical setup appears in favor of the bears.

GBP/USD additional levels to watch

GBP/USD

Overview
Today last price	1.4118
Today Daily Change	-0.0042
Today Daily Change %	-0.30
Today daily open	1.4161

Trends
Daily SMA20	1.4144
Daily SMA50	1.3965
Daily SMA100	1.3899
Daily SMA200	1.3552

Levels
Previous Daily High	1.42
Previous Daily Low	1.4083
Previous Weekly High	1.4249
Previous Weekly Low	1.4083
Previous Monthly High	1.4234
Previous Monthly Low	1.3801
Daily Fibonacci 38.2%	1.4155
Daily Fibonacci 61.8%	1.4128
Daily Pivot Point S1	1.4096
Daily Pivot Point S2	1.4031
Daily Pivot Point S3	1.3978
Daily Pivot Point R1	1.4213
Daily Pivot Point R2	1.4265
Daily Pivot Point R3	1.433

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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