- US Federal Reserve hawkish stance put the dollar on the bullish track.
- Brexit tensions related to the Northern Ireland Protocol undermine demand for the pound.
- GBP/USD is poised to extend its decline in the near-term.
The GBP/USD pair advanced during London trading hours, reaching an intraday high of 1.4132, helped by better than anticipated UK inflation data. The Consumer Price Index was up by 2.1% YoY in May, while the core reading hit 2%. The Retail Price Index in the same period hit 3.3% as expected. However, a hawkish US Federal Reserve sent the pair down to 1.3996, its lowest in over a month.
Brexit tensions related to the Northern Ireland Protocol, however, kept limiting the pound’s strength. UK negotiator David Frost asked the EU some “breathing space” to negotiate an agreement after the Union announced a ban on the sale of British sausages in Northern Ireland. The UK won’t publish macroeconomic data on Thursday.
GBP/USD short-term technical outlook
The GBP/USD pair has traded as low as 1.3997, now struggling to retain gains just above the 1.4000 mark. The 4-hour chart shows that sellers defended the 1.4100 area, in where a bearish 20 SMA is crossing below the 200 SMA. Technical indicators head vertically south, currently flirting with oversold readings. Nevertheless, the risk remains skewed to the downside, with further declines likely once below 1.3985, the immediate support level.
Support levels: 1.3985 1.3940 1.3890
Resistance levels: 1.4035 1.4080 1.4125
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