GBP/USD has been drifting lower as the safe-haven dollar finds reasons to rise. According to FXStreet’s Analyst Yohay Elam, sterling is set to suffer even if the dollar takes a breather.
Concerns about Britain's covid situation could keep cable depressed
“The flip side to downbeat economic news is that the Federal Reserve could delay tapering of its bond-buying scheme, thus printing more dollars for longer and devaluing the currency. Signs of a slowdown in US inflation also support looser monetary policy.”
“While markets await a speech from Fed Chair Jerome Powell on Tuesday, it is time to examine how the pound is positioned – and the answer is not positive. The Bank of England has been moving toward tightening its policy, but only just – it seems to be waiting for the Fed.”
“Another reason to be cautious is Britain's COVID-19 infections, which have halted their decline – and even moved higher.”
“Some resistance is at the daily high of 1.3873. It is followed by 1.3885, 1.3960 and 1.3980, all capped cable on its way down in August.”
“Support is at 1.3835, the daily low. Further down, last week's trough of 1.3785 is the next level to watch. Lower, 1.3765 and 1.3725 await.”
