GBP/USD Daily Forecast – British Pound Pulls Back After The Rapid Upside Move

GBP/USD Video 15.04.20.

Traders Focus On Early Signs That Lockdown Measures Will Be Gradually Lifted

GBP/USD pulls back following the upside move which took place after it breached the 50 EMA level. The  U.S. Dollar Index, which measures the U.S. dollar strength against a broad basket of currencies, is gaining some ground and tries to settle above the 99 level which was breached yesterday.

Currently, traders and investors focus on early signs that major economies will start to gradually lift coronavirus containment measures. In the U.S., President Donald Trump stated that he was developing a plan to end the lockdown and reopen some parts of the country even before May 1.

Meanwhile, one of the leading U.S. infectious disease experts, Dr. Anthony Fauci, stated that the target to reopen the economy on May 1 was too optimistic. The New York Governor Andrew Cuomo stated that Donald Trump could not order him to reopen the state if the healthcare situation did not allow it.

On the positive side, the number of hospitalizations in New York dropped, signaling that the worst phase of the crisis may soon come to an end. At this point, the market believes that the virus situation is developing according to an optimistic scenario, which provides support for riskier assets and serves as a bullish catalyst for GBP/USD.

Today, this optimism will be tested by the release of U.S. Retail Sales . Analysts believe that virus containment measures that were introduced in March dealt a heavy blow to retail sales and expect that they contracted by 8%.

U.S. Industrial Production is expected to decrease by 4% in March after gaining 0.6% in February.

Technical Analysis

GBP/USD continues to move in a tight upside channel after it breached the resistance level at the 50 EMA. As I wrote in my previous article, the next resistance level for GBP/USD is located at 1.2650.

This level got tested after a rapid upside move so GBP/USD had little chance to get above it during its first attempt. In case the resistance level at 1.2650 is breached to the upside, GBP/USD will head towards pre-crisis levels at 1.2750.

On the support side, the nearest support level is located at the 50 EMA at 1.2490. In case the pair goes below the 50 EMA, the 20 EMA at 1.2400 will serve as the next support level.