GBP/USD Outlook: Bears to Takeout 1.37 as USD Strengthens after Fed

• GBP/USD drops as the US dollar dominates the market after FOMC minutes.
• Investors are fleeing to safe-haven assets amid the spread of Delta variant.
• The UK struggles with inflationary pressure amid Brexit and pandemics.

The GBP/USD price outlook suggests a bearish continuation as the US dollar dominates the market amid Fed tapering clues in the FOMC meeting minutes.

The Sterling fell against the dollar in Thursday’s Asian trading session. The pair opened higher but quickly pulled back and hit an intraday low of 1.3713.

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Currently, the GBP/USD exchange rate stands at 1.3720, down 0.22% on the day.

US Dollar Index (DXY), a gauge that measures the dollar’s strength against six major peers, closed at 93.45, up 0.33% after the Fed was pledged in minutes to begin cutting asset purchases in 2021. The Fed’s meeting minutes for July provided some obvious clues about the tapering that triggered a strong rally in the US dollar.

Due to the rapid spread of the delta variant and the impact on the global economy, investors began flocking to safe-haven assets.

Meanwhile, the pound continued to struggle against the dollar. The Consumer Price Index (CPI) fell to 2.0% year on year in July, below the market’s expectation of 2.3%. A weaker reading temporarily reduced expectations of a rise in interest rates by the Bank of England (BOE).

According to two surveys by Lloyds Bank Plc and IHS Markit involving 1,500 firms, the UK exit from the EU and the Coronavirus pandemic are exacerbating inflationary pressures.

Initial claims for US unemployment are now being used as a gauge of the market’s health.

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GBP/USD price technical outlook: Bears eying at YTD lows

The GBP/USD pair broke out of the downtrend channel yesterday. Despite its attempt to rise, the pair posted an upthrust bar that led to a decline of 40 pips. The pair has covered just above 60% of the average daily range. The pair may find some interim support at the 1.3700 mark but the outlook is quite feeble and may test the YTD lows at 1.3570. However, there are some solid support levels before reaching the YTD lows.

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