GBP/USD pressured ahead of key UK data and lockdown fears
- The GBP/USD pair has tilted lower ahead of a key speech by Boris Johnson.
- According to Reuters, he will extend the lockdown by about a month.
- The ONS will publish key UK data on employment and inflation.
The GBP/USD is in a tight range ahead of a key speech by Boris Johnson on delaying the reopening in England as the Delta variant of coronavirus continues to spread. The pair is trading at 1.4100, which is about 1% below the highest point in May.
UK lockdown extension
The UK has made strong progress in battling the coronavirus vaccine. The country has already vaccinated millions of people and is one of the best performers. As such, the country was on track to a full reopening later this month.
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However, recently, the Delta variant of the vaccine has become a major issue. The new variant is 60% more transmissible than other variants and is more resistant to vaccines. In total, the UK has reported thousands of new cases of the virus recently.
Therefore, according to Reuters, Prime Minister Boris Johnson will address the country and possibly extend the reopening by a month. This will likely end the ongoing trend of relatively strong economic data from the UK.
Later this week, the GBP/USD pair will react to the latest data from the United Kingdom and the United States. On Tuesday, the UK will publish the latest UK employment numbers. Analysts expect the data to show that the unemployment rate declined from 4.8% to 4.7%.
These numbers will be followed by the latest UK inflation data that will come out on Wednesday. Analysts expect the data to show that the UK inflation continued matching towards the BOE 2% target.
The biggest catalyst for the GBP/USD will be the latest Federal Reserve interest rate decision that will come out on Thursday. Analysts expect the bank to leave interest rates and quantitative easing policy unchanged. They will be looking at whether the Fed will insist that the recent economic data are transitory. The Bank of England (BOE) will also meet next week.
GBP/USD technical analysis
The four-hour chart shows that the GBP/USD has been in a tight range recently. The pair is slightly above the lower side of the rectangle pattern whose support and resistance levels are at 1.4097 and 1.4215, respectively. It has also moved below the 25-day and 15-day moving averages and the right shoulder of the head and shoulders pattern. Therefore, the pair will likely keep falling as bears target the next key support at 1.4050.