GBP/USD: Fears of Delta-related slowdown and US inflation to push sterling lower

GBP/USD has tumbled to a three-month low amid growing covid concerns. According to FXStreet’s Analyst Yohay Elam, cable seems vulnerable to further falls.

See – GBP/USD: Break below support at 1.3734 exposes the 200-DMA at 1.3697 – Credit Suisse

Sterling free-falls on Freedom Day

“Almost all covid-related regulations have expired at midnight, opening the door to a return to normal. However, isolations, high cases – and the risk of an explosion of infections, hospitalizations and deaths are weighing heavily on sterling.”  

“American covid cases are moving up as well, especially in undervaccinated areas. However, the dollar is a safe-haven currency that benefits in times of trouble.”

“The pound has also been hit by Jonathan Haskel, an external member of the Bank of England's Monetary Policy Committee. Haskel stated that a tight policy is not the right one at this time. That stance by Haskel contrasts growing fears of US price rises. Fed Chair Jerome Powell said that price rises are ‘uncomfortably high’ in testimony last week.”

“Support awaits at the psychologically significant 1.37 level, which is also the daily low. The next cushion is critical – the double-bottom of 1.3670, recorded in the spring. It is followed by 1.3620.”

“Some resistance is at 1.3730, the previous July low, and then by 1.3750 and 1.3785.”