GBP/USD Forecast: UK's coronavirus coordination, oversold conditions, can make the pound a winner

• GBP/USD is trying to stabilize after the dollar's surge following the massive sell-off. 
• The UK's impressive broad coordination on coronavirus may allow for a swift recovery. 
• The four-hour chart is pointing to oversold conditions on the pair.

"Many families will lose loved ones" – Prime Minister Boris Johnson's somber message to the public, flanked by medical experts is one of the signs of a responsible approach to the crisis. The PM prepared the public for new restrictions that are yet to come, all based on expertise – contrary to his approach around the Brexit referendum.

Earlier this week, the government – which includes members confirmed positive for coronavirus – coordinated a massive response for the economic fallout from the disease. The BOE's 50 basis-point rate cut was followed by substantial relief for businesses and immense fiscal stimulus. Moreover, the Labour party – whose economic approach has been partially adopted by the Conservatives – is refraining from criticism and provides a united front. 

More: Market crash, dollar surge, are only the beginning If leaders fail to act

Will this help GBP/USD recover? 

The answer also depends on what happens in the US – whose actions are starkly different. President Donald Trump repeated the incorrect claim that everybody that can get a Covid-19 test and said markets will recover. He also rejected the Democrats' proposal for special funding – that is done in talks with Republicans. The president seems to double down on his approach in an address to the nation on Wednesday when he banned flights to and from Europe but failed to impress with fiscal measures. 

While the federal government is paralyzed, other authorities are acting. Most sports games have been suspended, Disney closed its parks and New York City joined other local governments in declaring an emergency. 

Are Americans worried? The University of Michigan's initial look at consumer confidence in March may provide some answers. 

See Consumer Sentiment Preview: Where will consumers lead?

Pound/dollar crashed on Thursday as investors rushed to the safety of the US dollar amid a massive market sell-off – the worst since "Black Monday" of 1987. It is recovering on Friday, also thanks to the Federal Reserve's second emergency intervention. After cutting rates last week, the Fed injected $500 billion in liquidity on Thursday and will do so again on Friday. 

Overall, further coronavirus-related headlines are set to rock markets. The pound is well-positioned to beat its peers amid the better response from British policymakers. 

GBP/USD Technical Analysis

The Relative Strength Index on the four-hour chart is below 30, indicating oversold conditions and suggesting a bounce. Other indicators point to the downside, with the pair trading below the 50, 100, and 200 Simple Moving Averages and momentum pointing down.

Support awaits at 1.2530, a temporary low, followed by 1.2490, the fresh 2020 low. Next, we find 1.2415 and 1.2350, dating back to October 2019. 

Resistance is found at 1.2630, the daily high, followed by 1.27, a temporary peak from the autumn, then by 1.2725, February's low, and then by 1.2775 and 1.2850.