Sterling in one-month lows, can go deeper?

US mixed data and complicated situation

By: Ahura Chalki

Market analyst – IFC Markets

With stronger USD and delay in UK reopenings and Brexit woes, Cable dropped to its one-month lows. 

Later, and with US mixed data, the greenback could not hold its position and lost the ground against other currencies and the Pound. According to the published data, Producer inflation and Industrial production are both rising, while Retail Sales fell -1.3% in May from 0.9% growth in April. 

In the UK, the government’s decision to delay the final stage of easing lockdowns challenges the economic recovery expectations. While the British were one of the most prosperous nations in vaccination progress, the spread of the latest variant of the COVID-19 virus (Delta) raising the level of risk. Additionally, ongoing disputes between the UK and EU on the Northern Ireland protocol can negatively motivate Sterling. 

GBPUSD technical review

While ahead of the FED announcement, we are not expecting more aggressive moves in the market. Technical indicators signal the beginning of a downtrend, under the lower band of the latest created trading range at 1.4080. Albite a few pips recovery back above 1.4080, it is still down nearly 0.30% today. Currently, Parabolic SAR forming its dots above candles, MACD histograms moving under 0-line, and price moving under OBV trend line. 1.4080 is still the critical support, and breaching under this level will put the 1.4000 in the spotlight, and any downtrend must be confirmed under this level. On the flip side, above the first resistance at 1.4130 can change the trend. 

GBPUSD


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