GBP price, news and analysis:
- GBP/USD continues to trade within a bearish descending triangle pattern on the charts, pointing to a break to the downside if support breaks.
- From a fundamental perspective, the key question remains whether risk-on assets like GBP will be in demand as the global economy expands or, more likely, whether the safe-haven US Dollar continues to benefit from the spread of the delta variant of Covid-19, leading to tougher lockdowns.
GBP/USD could weaken further
GBP/USD continues to test support around the 1.38 level provided by the support line of a descending triangle pattern on the charts that has contained prices for the past two weeks. Descending triangles are seen as bearish by technical analysts so more losses can be expected if that support breaks.
GBP/USD Price Chart, One-Hour Timeframe (June 15 – July 1, 2021)
Source: IG (You can click on it for a larger image)
Note that on Wednesday outgoing Bank of England chief economist Andy Haldane said that by the end of this year he expects UK inflation to be nearer 4% than 3%, up from the current 2.1%. However, Haldane has been the most hawkish member of the Bank’s monetary policy committee so his comments were not unexpected and he is leaving the Bank anyway.
More generally the continuing spread of the delta variant of Covid-19, and the consequent fresh lockdowns in several countries are outweighing the continuing expansion of the global economy from the slump caused by the coronavirus pandemic. That will likely ensure that the safe-haven US Dollar benefits at the expense of currencies like GBP, AUD and NZD.
— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex