GBP/USD remains bearish as strength in USD, and the overall economic situation of the UK remains under question.
- USD found a new rise after stronger NFP data.
- The political situation in the UK and Delta concerns are looming over the cable.
- Focus remains on US CPI and UK growth data.
GBP/USD fundamental forecast: bears seek new levels
The selling pressure on GBP/USD remains intact, as bears seek new support levels amid rising Brexit worries and the US dollar’s ongoing gain.
Greenback rise continues
In light of Friday’s stronger-than-expected US nonfarm payrolls (NFP) statistics, the greenback continues to attract bids alongside Treasury yields, raising hopes of an earlier tapering by the Fed.
The US economy appears to be approaching the Fed’s substantial progress criterion, implying that monetary policy normalization will occur sooner than initially anticipated. Moreover, Fed policymakers Rosengren and Bostic have also backed early tapering, adding to the hawkish views.
Brexit clouds loom over the UK
Brexit fears have resurfaced on the other side of the Pond amid the immigration crisis. Nigel Farage, the former leader of the Brexit Party, criticized France and the EU for failing to do anything to avert the dangerous cross-channel migrant problem.
Meanwhile, political concerns in the United Kingdom about Prime Minister Boris Johnson’s intention to oust Finance Minister Rishi Sunak add to the pound’s woes.
What lies ahead?
Looking ahead, the US dollar’s price action and Brexit developments will continue to influence the pair.
Traders are also looking forward to the US Senate’s vote on the infrastructure measure. This week’s attention, however, remains on the UK Preliminary Q2 GDP and US CPI statistics.
The Consumer Price Index for July in the United States will take center stage this Wednesday, with the headline predicted to decline a bit to 5.3 percent year on year and the core forecast to fall two ticks to 4.3 percent year on year.
At 06:00 GMT on August 12, 2021, British economic growth figures will be released to the marketplace for the second quarter. Forecasts point to a strong report, as widespread immunizations let the economy reopen.
The Bank of England made another step toward normalization last week, and if the economy continues to perform well, it will likely stop buying assets this year, which would be a positive sign for the pound.
GBP/USD technical analysis: key levels in action
Looking at the daily chart, bears are trying, as it aims for a support level at 1.3700. If the price continues to drop, it might test the 20-day MA around 1.3750 as its first target.
The RSI indicator is just below the neutral level. Therefore, any decrease in the price will prevail over the bearish trend.
If the price manages to break 1.3700-mark, it will signal another selling round for the cable. The pair’s last support level of 1.3870 now acts as a resistance level.
