GBP/USD Daily Forecast – British Pound Gains Ground Ahead Of U.S. Initial Jobless Claims Report

GBP/USD Video 23.04.20.

A Data-Heavy Day

GBP/USD continued to rebound as improvements on the oil price front helped global markets gain some optimism. Interestingly, the U.S. Dollar Index, which serves as a gauge of market fear during the current crisis, is showing no signs of weakness and continues to stay above the psychologically important 100 level.

Today, the recent market optimism will get tested by economic news. In the UK, traders will get a chance to evalate the new data on Flash Manufacturing PMI, Flash Services PMI and Flash Composite PMI.

Flash PMI reports are based on the survey of 85% purchasing managers and present a good chance to estimate the ultimate PMI numbers.

As the lockdown measures put an enormous pressure on services, the Flash Services PMI is expected to come at 29 compared to previous reading of 34.5. Numbers below 50 show contraction.

The situation on the UK manufacturing front is better but Flash Manufacturing PMI is expected at 42 compared to the previous report of 47.8.

In the U.S., traders will have to digest a flurry of data including Initial Jobless Claims, Continuing Jobless Claims, Flash Composite PMI, Flash Services PMI, Flash Manufacturing PMI and New Home Sales.

The main focus is on U.S. Initial Jobless Claims report which is expected to show that 4.2 million of Americans filed for unemployment benefits, taking the total number of initial unemployment benefit filings over 26 million since the beginning of the crisis.

At the same time, Continuing Jobless Claims are also of great interest since this report will show whether the measures to help businesses preserve jobs are working or not. The current consensus for Continuing Jobless Claims is 16.5 million.

Technical Analysis

GBP/USD continues to rebound from the support level at 1.2250. The nearest resistance for the pair is located at the 20 EMA near the 1.2400 level.

In case this resistance is breached to the upside, GBP/USD will head towards the 50 EMA at 1.2465. A successful test of the 50 EMA will open the way to recent highs at 1.2650.

On the support side, the breach of the nearest support level at 1.2250 will lead to increased downside momentum and take the pair closer to the next support level at 1.2170.