GBP/USD Daily Forecast – U.S. Dollar Gains Ground Amid Demand For Safe Haven Assets

GBP/USD Video 20.04.20.

Attention Shifts Back To Coronavirus Data

GBP/USD started to pull back from recent levels as traders put purchases of riskier assets on pause. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, was located near the psychologically important 100 level.

There’s no major economic data scheduled to be released today. The U.S. will report Chicago Fed National Activity Index for March, while the UK has no economic releases in the calendar.

In this situation, attention shifts back to healthcare data and forecasts regarding the timing of the end of lockdown measures.

According to data from Johns Hopkins University, the U.S. has accumulated 759,687 coronavirus cases, while the UK has 121,173 cases.

The UK Cabinet Office minister Michael Gove stated that it was too early to talk about lifting restrictions. In the U.S., President Donald Trump continued his effots to find a path to reopen the economy but faced resistance from governors of hardest-hit states.

Meanwhile, the U.S. is set to deliver another coronavirus aid package for the country’s small businesses which got hit especially hard during the coronavirus pandemic.

Banking on healthy demand for the U.S. Treasuries and the U.S. dollar, the U.S. continues to throw additional money at the problem. Both the American government debt and the American currency continue to serve as safe haven assets of last resort despite the grim economic data which was published in the U.S. in recent weeks.

Technical Analysis

GBP/USD continues to trade between the 20 EMA at 1.2425 and the 50 EMA at 1.2490. The 20 EMA serves as the nearest support level for the pair while the 50 EMA is the nearest resistance level.

In case GBP/USD breaches the 20 EMA level to the downside, it will head towards the next support level at 1.2350. The ultimate goal of such downside move is the major support level at 1.2170.

On the upside, GBP/USD will have to breach the 50 EMA level to get a chance to test the recent highs at 1.2650. If such a test is successful, the pair will gain additional upside momentum and head towards pre-crisis levels at 1.2750, completing the current rebound.