GBP/USD Video 26.05.20.
British Pound Gains Ground Amid Rising Demand For Riskier Currencies
GBP/USD is gaining ground as the continued reopening of the world economy boosts appetite for riskier assets.
The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has declined from the 100 level towards 99.5.
In addition to the general softness of the U.S. dollar, the British pound is supported by the gradulal reopening of the British economy.
On Monday, UK Prime Minister Boris Johnson stated that outdoor markets and car dealers will reopen from June 1 while other non-essential retail will be able to open its doors from June 15.
Today, the U.S. will release New Home Sales data for April. Analysts expect that New Home Sales declined by 21.9% on a month-over-month basis as they were hit by coronavirus-related measures that kept potential buyers at their homes.
Yesterday, GBP/USD tried to get below the nearest support level at 1.2170, but the increased appetite for riskier currencies provided material support for the British pound, and the pair is back above 1.2200.
On its way up, GBP/USD will have to deal with the key resistance level at 1.2250. Previously, the rebound from the recent lows at 1.2080 was stopped at 1.2250, and failure to settle above the key resistance level suggested that the downside trend in GBP/USD will continue.
This time, GBP/USD will have another chance to get above 1.2250, supported by global market optimism. If GBP/USD manages to settle above this level, it will likely gain material upside momentum and head towards the next resistance level at the 50 EMA at 1.2350.
On the support side, the nearest stupport is located at 1.2170. In case GBP/USD breaches this level, it will likely fall closer to recent lows at 1.2080.
In case GBP/USD fails to settle above 1.2250 for the second time, sellers will likely increase their activity, and GBP/USD will find itself in a new trading range between the support at 1.2080 and the key resistance at 1.2250.
For a look at all of today’s economic events, check out our economic calendar.