GBP/USD: Pound Set to End the Week Lower As Coronavirus Variant Spreads

Summary:

Fears of premature opening of the UK economy and the rise in coronavirus cases sparked a selloff on the GBP/USD, sending the pair 0.3% lower.

The Pound sterling has slipped 0.3% against the US Dollar and looks set to end the week lower in what would be the worst weekly performance for the Cable. Much of this comes from the increased greenback strengthening after US consumer inflation stoked new discussions about tapering. Furthermore, concerns about the premature opening of the UK economy has spooked bulls on the Pound.

The WHO was concerned about the massive gatherings of soccer fans to watch the Euro 2020 Championships. This Friday, several reports across the UK point to an increase in coronavirus cases across the country. Fifty thousand new cases were reported on Friday, the highest number since mid-January. South Tyneside, Leicestershire and Sunderland are areas where the coronavirus cases are soaring, fuelled chiefly by transmission from the delta variant.

The GBP/USD is down 0.89% for the week.

Technical levels to Watch

The decline in the GBP/USD has violated the support at 1.38126. Price appears set to aim for weekly lows at 1.37463. A breakdown of this area targets 1.36771 (24 March and 12 April lows). If this level gives way, then a bearish reversal is in the works.

On the flip side, a bounce on 1.37463 allows bulls to take back 1.38126, with 1.38616 and 1.39484 serving as additional targets to the north.