GBP/USD Forecast: UK at “the moment of maximum risk”
|GBP/USD Current price: 1.2420
- UK PM Boris Johnson returned to work, offered a speech at Downing Street.
- CBI realized sales in the UK seen down 40% in March.
- GBP/USD holding on to gains above 1.2400, bullish potential limited.
The GBP/USD pair is up for the day above the 1.2400 level. UK PM Boris Johnson returned to Downing Street and offered a speech, indicating that the UK is at “the moment of maximum risk,” warning of the dangers of re-opening the economies. However, he also acknowledged the economic risks related to the ongoing restrictions. Later in the day, the UK Finance Minister Sunak said that he shares with PM Johnson the sense of urgency to re-open the economy, but agreed it must be done safely. Overall, there’s a sense of disappointment, as beyond encouraging words, there are no details or plans about ending the lockdown, now set to continue until May 7.
The UK will release this Tuesday the CBI Distributive Trades Survey on realized sales, seen at -40% in April from -3.0% in March.
GBP/USD short-term technical outlook
The GBP/USD pair is neutral, as, despite the intraday advance, it lacked follow-through. The 4-hour chart shows that the pair is struggling around a directionless 100 SMA, while above the 20 SMA that converges with a Fibonacci level at around 1.2355. Technical indicators, in the meantime, remain flat just above their midlines. The downside seems limited as the pair would need to return to sub-1.2300 levels to become more attractive to bears.
Support levels: 1.2390 1.2355 1.2305
Resistance levels: 1.2430 1.2465 1.2500
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