GBP/USD Video 15.05.20.
How Much Damage Was Sustained By The U.S. Retail Sector?
GBP/USD found support near 1.2170 and currently trades close to 1.2200. The yesterday’s rebound of the U.S. equity market helped riskier assets but downside risks remain.
The U.S. Dollar Index, which measures the U.S. dollar strength against a broad basket of currencies, has pulled back a bit but stays above the 100 level.
The U.S. Dollar Index remains in a range between 99 and 101, and an upside move out of this range will be bearish for GBP/USD as it will signal broad U.S. dollar strength.
The most important economic release of the day is the U.S. Retail Sales report. Currently, analysts expect that U.S. Retail Sales declined by 12% in April following a decline of 8.4% in March.
Most likely, this will be a market-moving report so traders should watch it closely.
Other important economic data from the U.S. will include Industrial Production, which is expected to decline by 11.5% on a month-over-month basis, and Manufacturing Production, which is expected to contract by 13%.
The general market mood will also impact GBP/USD trading today as investors start to worry about the potential second wave of coronavirus, increasing U.S. – China tensions and the devastating impact of current virus containment measures.
If such worries prevail, the U.S. dollar will get more support due to its role as a safe haven asset of last resort.
GBP/USD got support near the first material support level at 1.2170. The pair will have to settle below this level to have a chance to continue the downside trend and head towards 1.2000.
A move below 1.2170, which is the low of the first pullback following the rebound from mid-March lows, will likely lead to increased downside momentum and take the pair to the next support level at 1.2115.
On the upside, the previous major support at 1.2250 has become the new resistance, and the pair will likely need additional catalysts to return to the previous trading range above 1.2250.
If this happens, GBP/USD may get upside momentum. In this scenario, the next important resistance level is located at the 20 EMA at 1.2350, followed by the 50 EMA level at 1.2410.