GBP/USD Video 11.05.20.
GBP/USD Settles Near The 20 EMA Level
GBP/USD is little changed as the pair stabilizes following the rapid moves seen during the previous week.
On Monday, no material economic reports are scheduled for publication in U.S. and UK so GBP/USD dynamics will be influenced by technicals and the general market mood.
UK Prime Minister Boris Johnson outlined plans for gradual lifting of the lockdown measures including allowing citizens to exercise more than once per day and encouraging those who cannot work remotely to return to their workplaces.
However, the exit from the lockdown is set to be long and it remains to be seen whether the economic rebound will be fast enough to justify the recent market optimism.
In an alarming development, China’s Wuhan reported new coronavirus cases, raising questions about the potential second wave of the virus. In all likelihood, the markets will watch the Wuhan situation very closely.
The UK is set to provide first-quarter GDP Growth data on May 12 which will be the most important economic report of the week. Currently, analysts expect that GDP declined by 2.1% year-over-year and contracted by 2.5% quarter-over-quarter.
In the U.S., traders will once again focus on new Initial Jobless Claims report. The pace of job losses is expected to slow down, and the consensus is that 2.5 million Americans lost jobs during the previous week.
From a big picture point of view, GBP/USD continues to trade in a wide range between the major support level at 1.2250 and the major resistance level at 1.2650.
Currently, the pair has settled close to the nearest resistance area between the 20 EMA at 1.2420 and the 50 EMA at 1.2450. This is a material resistance level for GBP/USD, and the pair will likely gain upside momentum in case it manages to settle above it.
In this scenario, GBP/USD will head towards the test of the major resistance level at 1.2650, although it will first have to face resistance at 1.2500.
On the support side, the nearest support level is located at 1.2350. If this level is breached to the downside, GBP/USD will head towards the major support level at 1.2250.