GBP/USD Recovers From a Two-Week Low

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Published: Apr 22, 2020, 11:17 UTC

The British pound briefly traded at a fresh two-week low against the dollar but is seeing some relief in the early day on Wednesday as the greenback is paring some of its recent gains.

UK inflation data showed a 1.5% rise in prices in the year to March which was down from 1.7% in February but in line with analyst estimates. The largest contributor to the upward pressure in the consumer price index came from higher air fares while a fall in motor fuels and clothing weighed on the index.

The UK house price index declined 0.6% in the month to February but rose 1.1% on an annual basis. Analysts were looking for a slightly larger 1.5% increase in house prices.

The Financial Times published a piece today that claims deaths in the UK related to the Coronavirus may be twice as high as the official numbers. The report estimates 41,000 people have died as a result of the virus based on a calculation that relies on the relationship between deaths at the hospital versus deaths at home.

Official government figures showed 17,337 virus-related deaths as of 9 am on April 21. There were 823 deaths reported yesterday, sharply higher from the 449 in the day prior.

Volatility stands to rise further on Thursday as both the UK and the US report purchasing manager’s survey data for the manufacturing and services industry.

Technical Analysis

GBPUSD Hourly Chart

GBP/USD has found some support at 1.2253 and is recovering as the dollar pares back some of its recent gains.

Tomorrow’s PMI data should set the tone for the pair, and until then, we could see a further recovery.

Resistance is found just ahead of 1.2400 as the upper bound of a declining trendline comes into play. Above it, a further hurdle is seen at 1.2435 which is a horizontal level that previously acted as support.

Support for the session ahead is found at the 1.2300 handle.

Bottom Line

GBP/USD is recovering higher although tomorrow’s PMI data may ultimately decide the direction for the exchange rate.
Resistance in the session ahead is seen between 1.2400-1.2435.

About the Author

Jignesh Davdaauthor

Jignesh has 8 years of expirience in the markets, he provides his analysis as well as trade suggestions to money managers and often consults banks and veteran traders on his view of the market.