- GBP/USD sharply recovered on Friday amid improved risk sentiment.
- However, the pair is cautious on Monday amid COVID concerns.
- Brexit concerns and global economic recovery still haunt the Pound.
After recovering from the lows of 1.3740s on Friday, the GBP/USD price cautiously started the new trading week and held the range below 1.3900. After that, however, Greenback receives a new bid amid impending Covid worries and ahead of key U.S. consumer data.
The cable, however, caused a fantastic rebound from a multi-day low of 1.3741 but remained below 1.3900 before sellers regained control.
The cable’s yield of 115 pips sparked a sharp change in risk sentiment as global equities rallied, dampening the U.S. Dollar’s attractiveness.
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Investors appear to be shaking off recent concerns over the Delta-Covid option and its impact on the global economic recovery as the hunt for deals appears to have resumed after Thursday’s selling.
On Friday, the Federal Reserve presented its biennial monetary policy report to Congress, reaffirming the Fed’s commitment to economic growth. However, the central bank maintained its stance on low rates until further progress was made in recovering from last year’s pandemic recession.
On the flip side, the Pound’s gain has been offset by a new series of disputes between the U.K. and the E.U. over a new post-Brexit divorce law. The E.U. tabled a new total bill of £ 40.8 billion, which Downing Street rejected.
Meanwhile, according to a Deloitte study, following the lockdown, major UK companies are pushing for an investment plan that could help restore weak productivity growth in the country.
GBP/USD price technical view:
The 4-hour chart of the GBP/USD shows prices well above the 20 and 50 SMAs while both the SMAs pointing upwards. However, the price is still below the 200-period SMA, still pointing to the downside. The price has started retreating from today’s highs at around 1.3910. But the volume is below average, and we may see a clear picture during the earlier London session. The pair has so far covered around 30% of the average daily range. It means that we still have plenty of room to find the trend. However, the path of least resistance is on the downside. The forex signals are not clear but most players are looking at selling bias.
S1 – 1.3885
S2 – 1.3855
S3 – 1.3824
R1 – 1.3916
R2 – 1.3947
R3 – 1.3977
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