GBP/USD looks south towards 1.3800 amid renewed Brexit woes, USD strength
- GBP/USD under pressure amid USD strength, Brexit concerns.
- UK political woes and covid concerns also weigh on the cable.
- Data-light calendar keeps DXY price action in focus.
The selling pressure around GBP/USD remains unabated, as the bears seek a test of the 1.3800 level amid resurfacing Brexit concerns and persistent US dollar’s strength.
The greenback continues to draw bids alongside the Treasury yields amid expectations of an earlier tapering by the Fed, in light of Friday’s stronger than expected US Nonfarm Payrolls (NFP) data.
The US economy seems to be closing in on the Fed’s ‘substantial progress’ benchmark, calling for monetary policy normalization sooner than previously thought. Adding to the hawkish bets, Fed officials Rosengren and Bostic also back early taper.
On the other side of the Atlantic, Brexit concerns have returned to the table amid the migrant crisis. The former Brexit Party leader Nigel Farage slammed France and the EU for failing to “lift a finger” to prevent the dangerous cross-channel migrant crisis.
Meanwhile, the UK political worries over PM Boris Johnson looking to demote Finance Minister Rishi Sunak also adds to the weight on the pound.
Looking forward, the US dollar price action and Brexit updates will continue to influence the pair amid a data-light calendar. Traders also await the US Senate vote on the infrastructure bill. The focus, however, this week remains on the UK Preliminary Q2 GDP and US CPI data.
GBP/USD technical levels to watch
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.
