June 12 2021
GBPUSD Support to be challenged by Delta
I thought I would give you the heads up today. Be aware that due to an increase in the number of new cases of covid Delta (Indian) variant. British newspapers are printing a story that the UK Government will announce on Monday their intention to suspend fully re-opening the UK economy, for 4 more weeks, but no longer. All restriction was due to be lifted on June 21, the opening will be moved to forward to July 19.
This delay will allow extra time for more adults to get their second vaccination, as the Government tries to head off the third wave of infections. The economic impact of this delay will not be great however, the headline could cause the GBP to come under pressure in early trade on Monday.
Although this may not be much of a surprise in the UK. It will probably encourage some selling of the GBPUSD as it had already lost upwards momentum and failed again ahead of 1.4200 in trade on Friday.
I did say that while we remain below 1.4200 the risk continues to be for a deeper correction towards 1.4000. Well, we could see the correction that I have been looking for to happen in early trade on Monday.
You will find support first at 1.4080 then 1.4020 if we break 1.4000 expect a drop to 1.3960 which I see as the limit of any correction, from here I would expect the GBP to recover back towards 1.4100 at least, as the UK economy is fundamentally in excellent shape, and will outperform most G7 economies.
Next week there is a lot of UK releases to look forward to, with updates from CPI, Retail Sales and employment data.
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