GBP/USD Analysis: Stages a goodish intraday bounce, not out of the woods yet

• GBP/USD ends lower on Monday on news that UK PM was moved to intensive care.
• Optimism over slowing coronavirus cases/deaths helped regain some positive traction.

The GBP/USD pair had some good two-way price moves on the first day of a new trading week and was influenced by the news surrounding the UK Prime Minister Boris Johnson's hospitalization. Following a modest weekly bearish gap, the pair gained some intraday positive traction in reaction to the UK Housing Secretary Robert Jenrick's comments, saying that he heard that Johnson is doing well. The remarks helped soothe fears of any impending political complications and provided a modest lift to the British pound.

The uptick seemed rather unaffected by the downward revision of the UK Construction PMI, which recorded the steeped decline since April 2009 and illustrated the extent of economic fallout from the coronavirus pandemic. The pair quickly ran out of the steam on news that Johnson was moved to intensive care after his coronavirus symptoms worsened. The pair retreated around 100 pips from daily swing highs and subsequently fell below the 1.2200 round-figure mark during the Asian session on Tuesday.

Meanwhile, the latest optimism over slowing number of new coronavirus cases led to a strong recovery in the global risk sentiment. This eventually dented the US dollar's perceived safe-haven status and turned out to be one of the key factors that extended some support, rather assisted the pair to stage a goodish intraday bounce and jump back closer to the 1.2300 round-figure mark. In the absence of any major market-moving economic releases, either from the UK or the US, developments surrounding the coronavirus saga will play a key role in producing some meaningful trading opportunities. As investor look for signs that the pandemic may be reaching its peak, the unpredictable nature of the unknown virus might continue to infuse some volatility in the global financial markets.

Short-term technical outlook

From a technical perspective, nothing seems to have changed much for the pair and the near-term bias still seems tilted in favour of bearish traders amid the occurrence of a death-cross on the daily chart. However, the pair's inability to find bearish acceptance below the 1.2200 mark warrants some caution before placing any aggressive bets for any further near-term depreciating move.

In the meantime, the 1.2230-25 region now seems to protect the immediate downside and is closely followed by the 1.2200 round-figure mark. Sustained weakness below the mentioned handle is likely to accelerate the fall back towards daily swing lows, around the 1.2165 region, en-route the 1.2100 round-figure mark.

On the flip side, momentum beyond the overnight swing high, around the 1.2325 region, could get extended towards the 1.2375-80 supply zone. Some follow-through buying, leading to a move beyond the 1.2400 mark, has the potential to lift the pair further, though seems more likely to remain capped near the 1.2475-85 strong resistance zone.