GBP/USD recaptures 1.3900 amid UK reopening, Brexit optimism
- GBP/USD rebounds amid UK reopening and Brexit optimism.
- The cable remains bearish while below 100-DMA.
- Impending bear cross warrants caution amid a recovery mode.
GBP/USD is attempting a minor bounce to test the 1.3900 level, as it snaps a two-day downtrend induced by the Bank of England’s (BOE) dovish surprise and a rapid rise of Delta plus covid variant in the UK.
At the time of writing, the cable gains 0.20% on the day, trading at 1.3907 amid a renewed selling in the US dollar across the board. The spot also finds support from easing tensions over the EU-UK sausage war.
The bulls remain optimistic about former British Finance Minister Sajid Javid’s appointment as the country’s new Health Minister, replacing Matt Hancock, who stepped down following harsh criticism over his non-adherence to the covid protocols.
The further upside in GBP/USD appears limited, despite the latest leg up, as the BOE-Fed monetary policy divergence and UK’s covid concern will continue to weigh on the currency pair.
GBP/USD technical outlook
GBP/USD daily chart
The cable’s near-term technical view remains bearish so long as the bulls manage to find a daily closing above the critical 100-Daily Moving Average (DMA) at 1.3952.
Further, the Relative Strength Index (RSI) sits outside the oversold region but remains well below the midline, suggesting that the downside bias remains very well in place.
Adding credence to GBP/USD’s vulnerability, the price is on the verge of confirming a bear cross on the said time frame, as the 21-DMA is set to pierce through the 50-DMA from above.
The bears need to crack Friday’s low of 1.3879 to expose further downside.
GBP/USD additional levels to watch