GBPUSD successfully retraced more than 50 per cent of the recent bearish trend. GBPUSD broke below 1.2420, Can Bears sustain the bearish pressure? What are the charts and technical indicators are saying? Read more to find further insights into today’s GBPUSD Technical Analysis.
April 23, 2020 | AtoZ Markets – GBPUSD is currently trading around 1.2340 area while consolidating above 1.2250 area. After retracing higher aggressively, GBPUSD broke below the dynamic level on the daily chart. As per the current market context, Coronavirus impact on the global economy enhanced volatility and affected the definite momentum in GBPUSD as well.
GBPUSD Broke Below Significant Level After the U.S. Dollar Index Rose
GBPUSD pair dropped by 0.04% to 1.2350 area as the U.S. Dollar up against the commodity currencies. The U.S. Dollar got a boost from gains in Oil during the New York session yesterday, as the black liquid continued to claw back Monday’s huge fall. Moreover, the U.S. Dollar Index, which tracks the USD against other major currencies, has gained 0.06% to 100.59 by 4:38 AM GMT.
Furthermore, many analysts said that the investors are still looking forward to the U.S. Dollar as the Coronavirus pandemic’s negative economic impact will cheer up investors to hold their capital in the dollar, calculated a safe haven. Besides, Ray Attrill, head of FX strategy at National Australia Bank, told on an interview with CNBC, “The dollar is a bit of a phoenix-type character; it seems to keep coming back.” He also added, “I’m still of the view that the dollar rally is on borrowed time, but there are still signs of stress, and it’s not clear that the dollar shortage has addressed for everyone.”
On the other hand, the United Kingdom’s economy is cutting up under the fold of the COVID-19 lockdown, and the governments receiving is flying to the highest pick in history, which increase a huge amount of pressure on the government to set up an exit plan. Moreover, Bank of England interest-rate setter, Jan Vlieghe said, “We are experiencing an economic contraction that is faster and deeper than anything we have seen in the past century, or possibly several centuries. The risks are that it will take longer and that it will look a little bit more like a U than a V.”
GBPUSD Bearish Trend May Sustain Further
According to the Daily chart, the pair is currently residing near 1.2340 area after GBPUSD broke below 1.2420. Moreover, after retracing nearly Fibo level 61.8, GBPUSD broke below the dynamic level of 20 EMA. As per the current price action, if the price can have a daily bearish close below 1.2250 critical support area, the bearish pressure may sustain further with target towards 1.1450 area in the coming days.
Image: GBPUSD Daily Chart
Furthermore, the dynamic level 20 EMA is currently residing above the price, which may act as a strong resistance. Along with, the MACD lines are residing near 0.00 level and may have a bearish cross over, which is a good indication of further bearish momentum.
To conclude, GBPUSD broke below 1.2420 area, which indicates bears are still present in the market. An impulsive daily close below 1.2250 is required to find the definite momentum in the coming days.