GBP/USD Daily Forecast – British Pound Continues Its Attempts To Rebound

GBP/USD Video 07.04.20

UK PM Boris Johnson Is Taken To Intensive Care Unit Due To Worsening Coronavirus Symptoms

Yesterday, GBP/USD was trying to get back above the 20 EMA level but this attempt failed. Today, the pair continues its attempts to get above 1.2300 after briefly visiting the sub-1.2200 territory.

UK Prime Minister Boris Johnson, who was previously taken to hospital after ten days of suffering from coronavirus symptoms, was transferred to an intensive care unit.

While the leader’s health is important for a nation’s currency at times of unprecedented turmoil, Boris Johnson’s condition has not had any meaningful impact on the British pound.

Meanwhile, the U.S. dollar is losing ground against a broad basket of currencies after the U.S. Dollar Index failed to get through the 101 resistance level.

Yesterday, the equity markets showed great optimism on hopes that the virus would soon be contained, and the S&P 500 index was up as much as 7%.

The risk-on mode in the markets is typically bearish for the U.S. dollar which serves as the save haven asset of last resort. However, the U.S. dollar showed some strength despite the major upside move in the markets.

It remains to be seen whether the U.S. dollar can continue to show strength if the current equity market rally continues, as the early futures trading suggests.

Technical Analysis

GBP/USD continues its attempts to get back above the 20 EMA level. Yesterday, the pair spent some time above 1.2300 and even got close to 1.2330, but failed to hold above 1.2300 and fell towards 1.2200.

Today, the attempt to get a foothold above 1.2300 level is supported by the weakness of the U.S. dollar against a broad basket of currencies amid general optimism in the market.

If GBP/USD manages to stay above the 20 EMA, the next resistance level is located at 1.2330. If this level is breached to the upside, the pair will have a good chance to return to the upside trend and test the major resistance at 50 EMA at 1.2480.

On the downside, the recent lows near 1.2170 serve as the first material support for GBP/USD. If this support is breached to the downside, the pair would move towards the next support level at 1.2000.