GBP/USD Daily Forecast – U.S. Dollar Is Flat Despite Optimism In Global Markets

GBP/USD Video 17.04.20.

U.S. President Donald Trump Unveils A Three-Stage Plan To Reopen The U.S. Economy

Global markets have been upbeat this morning following presentation of a three-stage plan to reopen the U.S. economy and early reports that Gilead’s drug remdesivir may be helpful in treating severe COVID-19 patients.

However, the U.S. dollar maintained its strength against a broad basket of currencies and was mixed against the British pound.

U.S. President Donald Trump unveiled a three-step plan to reopen the economy. The plan will be implemented on a state-by-state basis, and the condition of the initial step is a downward trajectory in coronavirus cases for 14 days.

The first step opens some venues, and, in case there is no evidence of a pandemic rebound, the country proceeds with the second step which, among other things, allows all non-essential travel to resume. The third step is a full return to normal life with minor adjustments to prevent a new wave of the disease.

China reported that its GDP decreased by 6.8% in the first quarter. Analysts expected a contraction of 6.5%. Since the report was mostly in line with expectations, the report had limited impact on demand for safe haven assets like the U.S. dollar.

At the same time, China GDP contraction highlights the problems that will be encountered by major economies once they start reporting their post-lockdown GDP numbers. Only one province in China suffered a complete lockdown, while the others used lighter virus containment measures.

Yesterday, the U.S. dollar got a boost due to disappointing U.S. Initial Jobless Claims data, but it remains to be seen whether it will be able to maintain its strength today as the plan to reopen the economy and a hope for a virus treatment can be strong positive catalysts for riskier assets.

Technical Analysis

GBP/USD is currently trying to stay above the 50 EMA level near 1.2500. If the pair manages to settle below the 50 EMA, it will head towards the 20 EMA near 1.2400.

A move below the 20 EMA will mark the end of the current upside trend in GBP/USD, and the next big goal for the pair will be located at the recent support level at 1.2170.

On the upside, the nearest resistance for GBP/USD is at local highs at 1.2650. In case this resistance is breached to the upside, the pair will head towards pre-crisis levels at 1.2750.