GBP/USD Daily Forecast – British Pound Gains Ground On Optimistic Data From China

GBP/USD Video 14.04.20.

U.S. Dollar Is Under Pressure Amid Increased Appetite For Riskier Assets

GBP/USD continues its previous upside trend amid broader U.S. dollar weakness. The U.S. Dollar Index, which measures the performance of the U.S. dollar against a broad basket of currencies, continued its downside move and remained below the psychologically important 100 level.

The markets turned their attention to riskier assets after China’s export and import data turned out to be better than expected. The data showed that Chinese economy was starting to rebound, although the situation remained challening.

Adding to global optimism, U.S. President Donald Trump stated that the plan to re-open the U.S. economy would be completed soon. In turn, New York, California and eight other states have entered into regional pacts in order to coordinate the re-opening of their economies.

Meanwhile, France extended its lockdown until May 11. According to data from Johns Hopkins University, France has 137,877 coronavirus cases compared to 582,580 cases in the U.S. and 89,571 cases in the U.K.

However, the country’s healthcare system is still overwhelmed, so the citizens will have to spend four more weeks under the lockdown. Of course, this does not bode well for the world economy.

In India, the lockdown was extended until May 3. At this point, the extension of lockdowns did not hurt the global markets as investors and traders are already focused on post-lockdown future.

Technical Analysis

GBP/USD broke through the major resistance at 50 EMA at 1.2480 and enjoys increased upside momentum. As I wrote before, the pair’s goal is to complete the rebound and return to pre-crisis levels at 1.2750.

The initial downside move was so fast that no major support/resistance levels were formed, but GBP/USD may face some resistance at 1.2650, like in October 2019.

On the support side, the previous resistance at the 50 EMA level at 1.2480 became the new support level. If this level is breached to the downside, the next support level is located at the 20 EMA level at 1.2370.

In case GBP/USD breaches both the 50 EMA and the 20 EMA to the downside, the current upside trend will end, and the pair will likely test the recent low at 1.2170.