GBP/USD Daily Forecast – Test Of Support At 1.2450

GBP/USD Video 15.06.20.

Fears Of Second Coronavirus Wave Put Pressure On British Pound

GBP/USD is under pressure as demand for riskier assets declines due to fears of second coronavirus wave.

China has implemented strict measures in Beijing after the capital reported record numbers of new coronavirus cases. Beijing reported 36 new COVID-19 cases which was the highest number since March when China struggled with the first wave of the disease.

In the U.S., both new cases and hospitalizations are rising in a number of states. The market fears that the increase of coronavirus cases may lead to more restrictions and put additional pressure on the economy.

In this situation, demand for safe haven assets increases. The U.S. dollar, which has recently been in a downside mode, is gaining back some of the previous losses.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has recently settled above 97 after testing sub-96 levels a few trading sessions ago.

Technical Analysis

GBP/USD is under significant pressure as fears of the second wave of coronavirus provide support for safe haven assets like the U.S. dollar. Currently, GBP/USD is testing the support at the 50 EMA at 1.2450.

If this test is successful, GBP/USD will continue the current downside move and head towards the test of the next support level at 1.2350.

On the upside, the nearest resistance for GBP/USD is located at the 20 EMA at 1.2515. In case GBP/USD gets above this level, it will head towards the next resistance level near 1.2650.

From a big picture point of view, GBP/USD is back into the trading range between 1.2250 and 1.2650. GBP/USD made one downside breakout back in May which was followed by an upside breakout in June, but it did not have enough catalysts to start a new trend.

I’d note that the 20 EMA may soon cross the 50 EMA to the downside, suggesting the increase of downside momentum. However, GBP/USD will need more catalysts to start a new downside trend below 1.2250.

For a look at all of today’s economic events, check out our economic calendar.