GBP/USD to suffer from more pressure as Dominic Cummings set to testify

GBP/USD remains under pressure below 1.42. Former Downing 10 adviser Dominic Cumming's testimony and downside momentum are set to send sterling lower, Yohay Elam, an Analyst at FXStreet, briefs.

Bears are gaining ground

“Dominic Cummings was a senior to Prime Minister Boris Johnson and he could spill the beans on the PM's mismanagement of the pandemic, undermining the government. That could hurt sterling. Cummings may also discuss Brexit in his appearance on Wednesday, as the topic remains on the agenda. The EU and the UK have yet to sort out how they implement the Northern Irish protocol, a leftover from the protracted process.”

“Another downside factor for sterling is the worrying rise of COVID-19 cases. While the increase comes from low levels – as the vaccination campaign reaches the 30-year-olds – the spread of the Indian variant is added to pound pressure. France considers restricting UK visits, following the footsteps of Germany.” 

“The greenback has been attempting recovery on Wednesday after falling on Tuesday, fueled by the Federal Reserve's dovishness. Members of the world's most powerful central bank have been reiterating the message that inflation is transitory and that the economy has a long way to go.” 

“Cable has slipped below the 50 Simple Moving Average on the four-hour chart and momentum turned to the downside. These developments show bears are gaining ground.” 

“Some support awaits at 1.4120, the daily low, followed by 1.41, which cushioned the pair last week. Initial resistance is at the daily high of 1.4170, followed by 1.4210, a swing high.”