GBP/USD: Three reasons to expect pound to plunge

FXStreet Insights Team FXStreet

GBP/USD is pressured around 1.4150 – where will it go from here? After several sluggish sessions of range trading, there are three reasons to expect a slide in cable, according to FXStreet’s Analyst Yohay Elam.

Cable has lost two SMAs on the four-hour chart, adding to the bearish sentiment

“Prime Minister Boris Johnson insisted that the fourth and last stage of Britain's reopening is on course to proceed on June 21, but sounded more cautious in his most recent remarks. According to the Times, the government is mulling a delay of two weeks in the reopening, using the extra time to vaccinate as many people as possible. While two weeks is far from dealing a deadly blow to Britain's economic recovery, it risks turning into a larger setback.”

“Maroš Šefčovič, the bloc's Brexit commissioner, wrote that ‘If the UK takes further unilateral action, the EU will not be shy in reacting swiftly, firmly and resolutely to ensure that the UK abides by its international law obligations’. This acrimony not only risks minuscule trade around the territory but further agreements between the EU and the UK on the regulations regarding the services industry. For sterling, the mere reappearance of Brexit is problematic and weighs on the currency.”

“When a currency pair trades in a limited range, it is hard to find substantial trends. Nevertheless, the four-hour chart consists of clues that the next move is down. GBP/USD slipped below the 50 and 100 simple moving averages and momentum has slipped lower.”

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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