GBP/USD Outlook Looks Positive Despite Covid, Awaits US Home Sales

• GBP/USD started the week lower but managed to gain some traction.
• Covid cases in the UK are rising that may weigh on the Pound.
• Powell’s speech is consistently keeping the Greenback lower.
• Brexit concerns may cause serious disruptions in the supply chain.

The GBP/USD price outlook is bullish as the US dollar is consistently losing ground after Powell’s speech. However, the rise in Covid in the UK may hamper the gains.

The GBP/USD exchange rate rose during the Asian trading session on Monday. Although the pair opened lower, it traded higher due to a broad dollar sell-off.

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As of this writing, the GBP/USD exchange rate stands at 1.3770, up 0.07% for the day.

The US Dollar Index (DXY), which measures the Greenback’s value against its six major peers, traded below 93.00, down 0.08% after FOMC Chairman Jerome Powell spoke at a symposium in Jackson Hole.

As a result of little macroeconomic activity last week, the pair traded over limited intraday areas and sentiments. While more than 30,000 new cases of Coronavirus infection are reported every day, and the death toll is increasing by 27% every week, the kingdom continues to operate. This week will be characterized by weak macroeconomic releases and a public holiday at the beginning of the week.

In a speech last week, Fed Chairman Powell said the central bank was likely to start tightening before the end of this year. However, there will be no change in the Fed’s current trading range until the economy reaches maximum employment and inflation.

A major effort is underway from the UK government to fight the chaos of Brexit, so they have rejected requests by a logistics trade body to temporarily relax immigration rules after Brexit due to the threat of shortages of truck drivers and other serious disruptions. Each link in the supply chain contributes to the process.

To gauge market sentiment, investors are waiting for the US home sales statistics.

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GBP/USD price technical outlook:

The GBP/USD pair fell to the broken trend channel resistance turned support and is again rising towards the 1.3800 area (200-period SMA on the 4-hour chart). The congestion of 20/50 SMAs on the same chart at 1.3732 also continue to support the upside.

The average daily range is so far 40%. The volume is slowly declining for the last few bars. This is a hurdle for the bulls. Otherwise, the Pound bulls look healthy to acquire 1.3800.

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