GBP/USD Daily Forecast: Cable under pressure

• GBP/USD is feeling the heat due to BoE, and the Delta Covid variant  
• Traders eye the NFP data, as the selling pressure remains limited for now
• The stronger greenback may add selling bias    

The GBP/USD pair recovered from an early European session drop to new two-and-a-half-month lows and was last seen trading about 1.3765.

Fundamental forecast

The pair saw some selling early in the trading day on Friday, falling to its lowest level since mid-April amid strong U.S. dollar buying demand.

In fact, the key USD index soared to new three-month highs, buoyed by expectations that the Fed may tighten monetary policy sooner than expected.

Yesterday, the U.K. revealed that the Manufacturing PMI fell from 65.6 in May to 63.9 in June, falling short of the expert average of 64.2.

Manufacturing PMI in the United States remained constant at 62.1, while analysts expected it to rise to 62.6. A key point to add here is that Manufacturing PMI in the United States and the United Kingdom remains high. Therefore, recent reductions had no major impact on currency movements.

Today, traders will pay close attention to job market figures from the United States. The Non-Farm Payrolls report is expected to reveal that the U.S. economy added 700,000 jobs in June.

The strong job market data may provide extra support to the American currency, continuing to rise, as it may cause GBP/USD to fall further.

The British pound was also pulled down by overnight dovish comments by BoE Governor Andrew Bailey, who stated that the central bank should not overreact to temporarily high inflation. This, combined with concerns over the spread of the more contagious Delta variant of the coronavirus, further drag the pound.

GBP/USD technical outlook: What’s happening at key levels?

The GBP/USD pair found support near 1.3745 and quickly recovered around 20 pips in the last hour.

If the GBP/USD falls below this level, it will head for support at 1.3710.

A break below the 1.3710 support level will lead to a test of the next support level at 1.3675. If the GBP/USD falls below 1.3675, it will move towards the 1.3635 support level.

On the upside, the prior support level of 1.3780 will serve as the first level of resistance for GBP/USD. The next possible level of resistance is at 1.3800. If the GBP/USD crosses above this level, it will advance towards the resistance level of 1.3835.

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