FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
98,351,970Confirmed
2,106,804Deaths
70,684,603Recovered
Fetching Location Data…
Advertisement
Advertisement
Vladimir Zernov
GBP/USD

GBP/USD Video 13.05.20.

Advertisement

UK Economy Contracts Less Than Expected

GBP/USD is rebounding from the major support level at 1.2250 following the release of UK economic data.

Advertisement
Know where GBP/USD is headed? Take advantage now with 

75% of retail CFD investors lose money

First-quarter GDP Growth Rate was -2.0% on a quarter-over-quarter basis compared to analyst consensus of -2.5%. On a year-over-year basis, GDP Growth Rate was -1.6% compared to consensus of -2.1%.

The British economy contracted less than expected which is good news for the pound, although the real hit for the UK economy will come in the second quarter.

Other economic data also exceeded expectations. Construction Output declined by 7.1% in March on a year-over-year basis while analysts expected it to contract by 8.2%.

Industrial Production declined by 8.2% on a year-over-year basis compared to expectations of a 9.3% contraction.

I’d note that while all of the above-mentioned reports contained data which came ahead of expectations, they showed that the UK economy was taking a huge hit from coronavirus.

Anyway, this data may provide some support for the British pound which has been under pressure due to virus fears and uncertainty about the timing of the end of the lockdown measures.

Also, comments from the U.S. President Donald Trump, which pushes the Fed to adopt negative interest rates, may also provide support for GBP/USD.

Technical Analysis

GBP/USD has once again found support above 1.2250. This is a major support level for the pair, and GBP/USD continues to trade in a wide range between 1.2250 and 1.2650.

In case GBP/USD manages to settle below 1.2250, it will likely get significant downside momentum and head towards the next support at 1.2170.

In this case, the pair could transfer from a range-bound mode into a downside mode, and it will have good chances to get below the support at 1.2170. In this scenario, GBP/USD will head towards 1.2000.

On the upside, the nearest resistance level for GBP/USD is at the 20 EMA at 1.2385, followed by resistance at the 50 EMA at 1.2430.

In case GBP/USD manages to get through the above-mentioned resistance area, it will head towards the next resistance level at 1.2500.

The better-than-expected UK economic data may help GBP/USD hold above 1.2250 but the risk is still shifted to the downside as the world markets may start pricing in a slower recovery following yesterday’s comments by Dr. Fauci, who told the U.S. Congress that the coronavirus outbreak was not yet under control.

 

 

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US