The U.S. dollar held steady against major currencies on Monday, after posting its biggest weekly gain in more than a month, as traders closed short positions ahead of a Federal Reserve policy meeting this week. The greenback was little changed among caution ahead of the Fed meeting that runs two days to Wednesday. In recent weeks, the Dollar index has fluctuated as traders weighed if inflationary pressure as the economy reopens after the pandemic could force the Federal Open Market Committee (FOMC) into an earlier tapering of stimulus.

The Repeated comments from policy makers that inflation would be transitory calmed those jitters, but markets also now anticipate the Fed may be close to giving clues on the timing for slimming its asset-purchase programme. “The dollar repositioning shows some nerves heading into the FOMC policy update,” NAB strategist Jason Wong wrote in a note. “Over the past month there appears to have been a growing chorus that the time to talk about tapering bond purchases had been reached.”

French President Emmanuel Macron offered the UK Prime Minister (PM) Boris Johnson, in what seems to be the last chance, to reset the relations amid a Brexit divorce deal the latter signed with the European Union (EU), Reuters reports, citing an unnamed source. The president told Boris Johnson there needed to be a reset of the Franco-British relationship, “This can happen provided that he keeps his word with the Europeans.” Broad dollar’s strength coupled with softer-than-anticipated UK data to send the pair lower, exacerbated by Brexit and coronavirus jitters. The kingdom published April Industrial Production, which contracted by 1.3% MoM and Manufacturing Production for the same month, which was down by 0.3%. The monthly Gross Domestic Product increased by 2.3%, below the 2.4% expected.

Britain reported another 7,738 COVID-19 cases in the past 24 hours, bringing the total number of coronavirus cases in the country to 4,558,494, according to official figures released Saturday. On Friday, market talks suggested that the UK government will likely delay easing lockdown restriction to July 19, initially scheduled for June 21. British Prime Minister Boris Johnson expressed “serious concern” about the spread of the coronavirus Delta variant on Saturday, supporting Friday’s headlines. The weekend G7 summit saw European leaders pushing UK Johnson to fully implement the Brexit Withdrawal Agreement. Tensions persist around Britain´s desire to alter the protocol that imposed checks on British goods entering Northern Ireland.

GBP/USD 4 Hour Chart:

Support: 1.4074 (S1), 1.4040 (S2), 1.3984 (S3).

Resistance: 1.4164 (R1), 1.4219 (R2), 1.4253 (R3).

Amidst the US dollar’s strength and delay in the UK reopening, pound seems to be weaker. As of now we expect a bearish trend for GBPUSD.