- GBP / USD looks vulnerable as the UK is gearing up for “Freedom Day”.
- The breakout of the symmetrical triangle on the daily chart points to a test of the 200 SMA.
- UK covid cases are the fastest growing in the world, risk aversion benefits the USD.
GBP / USD falls below the 1.3750 level as sellers remain in control amid gloomy market sentiment at the start of the European session on Monday.
Investors remain concerned about the recent surge in coronavirus cases around the world, in light of the highly contagious Delta strain of covid, leading to a pullback in perceived riskier assets while benefiting the safe haven US dollar. insurance.
Meanwhile, the resurgence of covid infections in the UK, as the nation prepares for a grand reopening today on “Freedom Day,” weighs negatively on the pound. Amid a possible removal of most social restrictions, the UK added more than 54,000 new cases on Saturday and more than 47,600 on Sunday.
Rising covid cases keep GBP bulls at bay.
All eyes remain on new covid-related developments on “Freedom Day”, while GBP / USD remains on the defensive amid the absence of top-tier macro news from both sides of the Atlantic.
GBP / USD technical perspective
GBP / USD confirmed a downside breakout of a symmetrical triangle on the daily chart last Friday.
The pair extends losses on Monday, heading for a test of the 200-day moving average (DMA) sloping upward at 1.3700.
Immediate support is seen at the July 8 low of 1.3742, which is now under attack.
The 14-day RSI is pointing lower below the midline, currently at 38, allowing for a further decline.
On the other hand, for a meaningful recovery, the bulls need a daily close above the triangle support now turned into resistance at 1.3789.
The next upside target for the pair’s bulls is at the slightly bearish 21 SMA at 1.3849.
All in all, the path of least resistance for GBP / USD looks to the downside.