GBP/USD Forecast: Next move hinges on Boris' condition, coronavirus concerns mount
|- GBP/USD has been clinging onto range as Brits await news regarding the PM's condition.
- Increases in COVID-19 deaths in the UK and other places weigh on market sentiment.
- Wednesday's four-hour chart is painting a mixed picture.
Prime Minister Boris Johnson is not on a ventilator – Downing Street's message has had mixed in message in trying to soothe confidence. The 55-year old leader has been in intensive care since amid persistent symptoms of COVID-19 on Monday evening, with Foreign Secretary Dominic Raab in charge of the government.
Updates from St. Thomas hospital in central London are few and far apart – keeping Brits on edge and in markets, holding GBP/USD in a tight range after initially falling in response to Johnson's ICU admittance.
The new man at the helm has little time to get used to his role which may last between days and much longer. The coronavirus crisis continues raging, with the UK suffering its deadliest day yet, reporting 854 mortalities on Tuesday. Officials have admitted that the initial government response of trying to achieve "herd immunity" – letting the virus run – has been a mistake.
Raab – has limited powers while deputizing as PM – will soon have to lead the government in deciding how to extend the UK lockdown that expires on Monday. The
Crossing the pond, New York also confirmed the highest number of daily deaths from COVID-19 with total deaths reaching 5,489, around half of all US mortalities. The nation's number of infections is on the verge of crossing 400,000. President Donald Trump blamed the World Health Organization for giving bad advice. However, memos reveal that Trump was aware of the outbreak's deadly potential already in January.
The broader market mood is mixed. Stocks pared their gains on Tuesday, allowing the US dollar to recover. Early advances in S&P futures are marginally weighing on the greenback.
Coronavirus headlines – and especially updates on the PM's condition – are set to dominate trading during the day. Any improvement could boost the pound while worrying news could weigh on it.
Late in the day, the Federal Reserve publishes its Meeting Minutes from the recent emergency meetings. The Fed slashed rates to 0%, unleashed unlimited Quantitative Easing, and also launched several swap and loan programs. The document may reveal how worried officials were before taking these decisions and perhaps what more they have in store.
See FOMC Minutes Preview: How worried was the Fed on March 15?
GBP/USD Technical Analysis
Pound/dollar remains in a tight range with the Relative Strength Index and momentum stabilizing on the four-hour chart. The currency pair is trading below the 50 and 200 Simple Moving Averages and above the 100 SMA. All in all, the picture is mixed.
Support awaits at 1.22, which provided support late last week followed by 1.2130, which was a cushion in late March. The next lines to watch are 1.20 and 1.1980.
Resistance is at 1.24, which was a high point on Tuesday, followed by the stubborn 1.2490 level. Further up, 1.2605 and 1.2710 are eyed.
More: GBP/USD downtrend intact, Gold has room to rise, top tips for traders – interview with Slobodan Drvenica
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