GBP/USD Daily Forecast – British Pound Tries To Rebound After The Pair Falls Below 20 EMA

British PM Johnson Is Taken To Hospital Due To Coronavirus

GBP/USD breached the 20 EMA below 1.2300 but the British pound is showing some signs of strength and tries to gain more ground amid optimism on the coronavirus front.

British Prime Minister Boris Johnson was taken to the hospital with persistent coronavirus symptoms as he has been ill for 10 days. His Downing Street office stated that his admission to the hospital was a precautionary step. The news did not cause any material weakness in the British Pound.

Meanwhile, the U.S. dollar is flat against a broad basket of currencies after the U.S. Dollar Index attempted to get through the 101 level. While the total number of coronavirus cases in the world continues to grow, the market sees some light at the end of the tunnel – S&P 500 futures are currently gaining as much as 4%.

The risk-on mode is typically bearish for the U.S. dollar during the current crisis since the American currency serves as a safe haven asset of last resort. It remains to be seen whether the current upside in the markets would be sustainable as it’s still too early to talk about lifting virus containment measures in developed economies.

According to data from Johns Hopkins University, the U.S. has already accumulated 337,637 coronavirus cases, while the UK has accumulated 48,440 cases. Unemployment data which was released last week showed that the crisis dealt a heavy blow to the economy, so investors and traders should expect that upcoming economic releases would look grim.

Technical Analysis

Currently, the key level for GBP/USD is the 20 EMA below 1.2300. If the pair manages to stay below the 20 EMA, GBP/USD will continue its downside movement.

This scenario will require some U.S. dollar strength against a broad basket of currencies. The current optimism in the markets is a bearish catalyst for the American currency but if the pair stays below the 20 EMA, it will be able to continue moving towards the next major support at 1.2000.

On the upside, the main resistance for GBP/USD is located at 50 EMA below 1.2500. In case this resistance is breached, the pair will have good chances to return to the pre-crisis level at 1.2750.