GBP/USD: Sterling set to suffer as “Freedom Day” may be less free than earlier anticipated

GBP/USD is retreating from the highs as the British government is set to leave some of its coronavirus-related restrictions after the July 19 reopening. According to FXStreet’s Analyst Yohay Elam, cable has more room to fall – at least on Monday.

The UK contemplates leaving some covid-related restrictions intact

“While the UK is set to lift a substantial set of restrictions on July 19, the persistent spread of COVID-19 cases has prompted ministers to suggest that wearing masks indoors and other rules will stay intact. Hints of a slower return to normal mean a weaker recovery.”

“Britain's economic recovery has already slowed down – or at least advanced at a weaker pace than expected. The UK reported an expansion of 0.8% in May, roughly half the early estimates. Jobs, inflation, and other figures are set to be released later this week.”

“In the US, infections are on the rise as well, with an increase of 60% in coronavirus cases, albeit from a low level. Nevertheless, investors flow to the safe-haven dollar in times of trouble, and if American growth falters, the world will feel it as well. The next significant US release is the inflation report for June, which could show some moderation in price rises.” 

“Support awaits at 1.13855, where the 100 SMA hits the price. It is followed by 1.3820, which is the 50 SMA's meeting point with cable's price.”

“Resistance is at the daily high of 1.3910, followed by 1.3940, which capped GBP/USD in late June.”