GBP/USD: Reopening fears and an upbeat US consumer to push the pound lower

GBP/USD is trading below 1.39. Yohay Elam, an Analyst at FXStreet, notes that bears defy promises of irreversible reopening, while US data is set to add pressure.

The pressure on cable will likely continue

“UK Health Secretary Sajid Javid wants to stick with the new reopening date of July 19 and insists that a return to normal is needed. By July 19, the UK will have vaccinated millions more. Will this convince buyers to jump on the pound? Not so fast, as more time is needed to see that this strain first identified in India is indeed unable to resist vaccines. Uncertainty could keep the pressure on the pound.”

“The dollar benefits from cautious optimism about the US recovery while fears about inflation have taken a step back. The Conference Board's Consumer Confidence statistics for June are set to show an increasing sentiment among shoppers, potentially giving the greenback another boost.” 

“Pound/dollar has been unable to recapture the 50 Simple Moving Average on the four-hour chart and suffers from downside momentum. Moreover, the Relative Strength Index is above the 30 level, thus far from oversold conditions – allowing for more falls.”

“Some support is at the daily low of 1.3860, followed by 1.3825, which capped cable when it was down in mid-June. Weak resistance is at 1.3885, the daily high. It is followed by 1.3940, which was a high point early in the week.”