GBP/USD pauses first weekly run-up in four below 1.4000 ahead of BOE

GBP/USD tilts southward below 1.4000, mildly offered around 1.3960, heading into the key London open on Thursday. While the pre-BOE caution pokes the cable buyers after a three-day uptrend, the pair remains on the front foot for the first week in June amid UK policymakers’ optimism.

The virus-led pessimism and the Brexit deadlock join the cautious sentiment ahead of the Bank of England (BOE) monetary policy to weigh on the quote.

That said, a 41% jump in the Delta Plus covid infections and uncertainties over the July 19 deadline for the UK’s complete unlock probes optimists at the “Old Lady” (BOE). The same could well be witnessed in the recently softer economics, namely the preliminary readings of the UK’s June monthly Markit PMIs.

Brexit woes remain critical for the GBP/USD traders even as the European Union (EU) is ready for a mild leeway concerning the sausage war, per Bloomberg. The reason could be traced from the British policymakers’ comments, spotted in The Independent, suggesting a lack of readiness to alter the demands over the Northern Ireland (NI) protocol. Additionally, Irish fishermen show dissatisfaction with the fishing quotas and are ready to protest over the same, signaled the Sky News.

On the other hand, Fed speakers and Treasury Secretary Janet Yellen struggle to convince markets of no rate hike and tapering fears. At the same time, US Senators are in a rush to pass President Joe Biden’s infrastructure spending bill ahead of a two-week holiday period. It’s worth noting that the coronavirus (COVID-19) variant fears regain traction in the US after an Epidemiologist warns over the jump in the cases this fall.

Amid these plays, stock futures are mildly bid and the US 10-Treasury yields keep the previous day’s recovery moves, which in turn favor the US dollar index (DXY) to pare the weekly losses during the second positive day.

Moving on, BOE policymaker’s voting count and statements conveying the economic optimism will be the key to recall the GBP/USD bulls. Alternatively, comments suggesting a delay in the monetary policy adjustments may extend the latest pullback. It should be noted that the Fed’s tapering clues do inflate hopes from the English central bank.

Read: BoE Preview: Cautiously hawkish, hints on tightening?

Following the BOE, US Durable Goods Orders and comments from the Federal Reserve (Fed) will be crucial as greenback traders remain skeptical over policymakers’ efforts to tame the tapering and rate hike woes.

Read: US Durable Goods Orders May Preview: Is the consumer really absent?

Technical analysis

GBP/USD remains above the key hurdles, namely a 100-day SMA level of 1.3950 and a horizontal area from early April, around 1.3925-15, amid upbeat RSI conditions to keep buyers hopeful. However, the 1.4000 threshold and the late April tops near 1.4010, followed by 50-day SMA near 1.4035, test the cable’s short-term upside moves.