GBP/USD WEEKLY ANALYSIS – 12TH – 16TH JULY

GBP/USD has proved abortive to make use of the reopening in the UK.

The dollar reigned highest, almost independent of bond yields and some Fed caution. Top-rated US consumer figures and Britain's jobs report are now anticipated – together with growing fears of the Delta variant on both sides of the pond.

This week for GBP/USD:

UK reopening: PM Boris Johnson proclaimed that the UK would completely reopen on July 19, nullifying hundreds of COVID-19 boundaries. This “breach” of rules and predictions of a return to normal briefly improved the pound.

UK events: Eyeing Delta, jobs, and CPI

Will PM Johnson stick to his promise to reopen the economy？ That heavily depends on covid cases, which hinge also on Britain's efforts to reach as many people as possible with first and second vaccine doses. Over half of the population is now fully immunized, yet the rapid spread of the Delta variant means more needs to be done.

US events: Consumer in the spotlight

The US President – Joe Biden, purposes to vaccinate a minimum of 70% of adults with one jab by July 4. The date came and went, and among the 68% of those over 18 years of age who have received one shot, many still have not had the second dose needed to protect against Delta.

On Wednesday, the producer price statistics for June will be of interest, as some traders see them as a signal giver for consumer price data later down the line. The Fed's Fawn Book – a gathering of subjective indication from the bank's contacts – may also influence the dollar, especially if it indicates high inflation.

The weekly jobless claims that will come on Thursday will likely be discharged by investors except it comes out highly unexpected, and especially as agitations would already be raging toward Friday's Retail Sales data. The consumption-centered US economy has seen an unsatisfactory plunge in both headline sales and the Control Group back in May.

GBP/USD Technical analysis

GBP/USD continues suffering from downside momentum on the daily chart, and the Relative Strength Index (RSI) is still above 30 – thus outside oversold conditions. That implies there is more room for the downside.

Support awaits at 1.3670, which is where the all-important 200-day Simple Moving Average (SMA) converges with a double-bottom formed on the graph earlier in the spring. It is backed up by 1.3735, the July trough.

If the cable breaks below that level, the lines to watch are 1.3580 and 1.3410 – which both played a role early in the year.

Some resistance is at 1.3800, which held GBP/USD up in May, and by 1.3900, a swing high from the beginning of July. Further above, 1.4010 is a strong cap – a juncture of lines including the 50-day SMA and a separator of ranges from April.

GBP/USD Sentiment Analysis

It is difficult to argue against more dips for the currency pair. The Delta variant is a win-win for bears – weighing on sterling by threatening the reopening and boosting the safe-haven dollar. However, data may miss estimates, strengthening the gloomy notion for one more week.