The lifting of restrictions should have triggered a correction in the market. This also should have led to steady growth in the pound sterling. However, the bearish trend extended as new coronavirus cases continued to soar in the UK. Moreover, plans to make COVID-19 vaccine passports mandatory at nightclubs were also deeply concerning. There is no way that all quarantine restrictions were lifted. It seems that they simply eased some restrictions in order to immediately replace them with other ones. It is no wonder the sterling is facing intense pressure.
After such a rapid decline, a rebound is inevitable. However, it can take the price a while. US macroeconomic data should provide support for the greenback today. Housing starts in the US are estimated to increase by 0.8% and building permits to rise by 0.5%. An expansion of the construction sector indicates an upturn in manufacturing and consumer confidence. This means that a steady recovery of the US economy is still underway.
United States Housing Starts:
Despite being oversold, the number of short positions in GBP/USD is increasing. As a result, the quote went down to the lowest level as of March-April.
High speculative interest still prevails in the market.
Market participants are still at the level of 1.3650/1.3670 despite an attempt to extend the bearish trend.
In case of consolidation below 1.3650, the pair is likely to go down to 1.3600–1.3550. Notably, such a swift and protracted downward movement reflects an oversold status of the market that has the potential for a price bounce.
In terms of complex indicator analysis, technical indicators are giving sell signals.
InstaForex Group