GBP/USD trades with modest losses below 1.4200 mark, downside seems limited

GBP/USD edged lower on Friday and eroded a part of the previous day’s strong gains.
Rising US bond yields revived the USD demand and exerted some downward pressure.
The upbeat UK economic outlook, BoE Vlieghe’s hawkish comments helped limit losses.
The market focus will remain glued to the release of the Fed’s preferred inflation gauge.

Haresh Menghani FXStreet

The GBP/USD pair maintained its offered tone through the early part of the European session, albeit lacked any strong follow-through selling. The pair was last seen trading around the 1.4185-80 region, down nearly 0.15% for the day.

The pair continued with its struggle to find acceptance above the 1.4200 round-figure mark and witnessed some selling on the last trading day of the week. The downtick was exclusively sponsored by a goodish pickup in the US dollar demand and forced the GBP/USD pair to erode a part of the previous day's strong positive move.

The USD found some support from a follow-through uptick in the US Treasury bond yields, bolstered by reports that US President Joe Biden will announce a $6 trillion budget for the fiscal year 2022. The coming supply of government debt stoked fears about rising inflationary pressures, which might force the Fed to tighten its monetary policy.

That said, a combination of supporting factors held traders from placing any aggressive bearish bets around the GBP/USD pair. On Thursday, the Bank of England's MPC member Gertjan Vlieghe indicated that the central bank could raise rates well into next year if there is a smooth transition from furlough and the economy rebounds more quickly than expected.

This comes on the back of the optimistic outlook for the UK economic recovery from the pandemic amid the gradual easing of lockdown measures. In fact, UK Prime Minister Boris Johnson also said there is nothing in the data currently to delay the plan to end restrictions fully on June 21. This should continue to act as a tailwind for the British pound.

Investors also seemed reluctant, rather preferred to wait on the sidelines ahead of Friday's release of the Fed's preferred inflation gauge. The US Bureau of Economic Analysis is scheduled to release the core PCE Price Index later during the early North American session, which will influence the USD price dynamics and provide some impetus to the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price	1.419
Today Daily Change	-0.0018
Today Daily Change %	-0.13
Today daily open	1.4208

Trends
Daily SMA20	1.4064
Daily SMA50	1.3919
Daily SMA100	1.3866
Daily SMA200	1.3522

Levels
Previous Daily High	1.4219
Previous Daily Low	1.4092
Previous Weekly High	1.4234
Previous Weekly Low	1.4077
Previous Monthly High	1.4009
Previous Monthly Low	1.3669
Daily Fibonacci 38.2%	1.4171
Daily Fibonacci 61.8%	1.4141
Daily Pivot Point S1	1.4126
Daily Pivot Point S2	1.4045
Daily Pivot Point S3	1.3999
Daily Pivot Point R1	1.4254
Daily Pivot Point R2	1.43
Daily Pivot Point R3	1.4381

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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