GBP/USD Forecast: Bears bracing for Boris' emergency measures as coronavirus concerns mount

Even the best possible response – and the high level of UK coordination is impressive – cannot stop coronavirus and its substantial economic downfall.  GBP/USD is falling down as Prime Minister Boris Johnson is convening his cabinet to decide on additional restrictions. 

Will the UK allow only groceries and pharmacies to remain open like in Italy? Probably not so fast, but any limits on economic life will add to the economy's pain. 

According to reports, the Cobra panel will announce a move from the "contain" phase to the "delay" one, limiting gatherings. 

On Wednesday, markets cheered the UK's coordinated response. The Bank of England surprised markets with an unscheduled double-dose rate cut – from 0.75% to 0.25%, following the footsteps of the Federal Reserve. The BOE also announced a £100 billion lending scheme to provide relief for businesses. 

The government then followed by opening its purse strings for coronavirus research, relief for workers and the wider population, and a leap in infrastructure spending. Chancellor of the Exchequer Rishi Sunak added that the government can do more in face of the crisis. His new budget moves away from previous Conservative governments' austerity policies and the Labour opposition cheered it, in a sign of unison. 

Broader markets are struggling as well after US President Donald Trump failed to impress the public and investors by announcing limited measures to help employees while banning flights to and from Europe – excluding the UK. The administration has yet to introduce meaningful fiscal stimulus. Calling the disease a "foreign virus" also seems unhelpful. 

See Stocks analysis: It’s not nice to tease the markets: Equities enter bear territory

In the US, there are over 1,320 cases, including an NBA player who tested positive. The league canceled its games. Football matches continue in the UK, where the highest-profile person confirmed with the illness is an unnamed cabinet minister, one of over 400 cases in the country. 

Overall, coronavirus health updates and governments' responses to them are left, right, and center. 

GBP/USD Technical Analysis

Pound/dollar is suffering from downside momentum on the four-hour chart and it fell below the 50, 100, and 200 Simple Moving Averages. The Relative Strength Index is just above 30, still outside oversold conditions.

Critical support awaits at 1.2725, the low point from late February and the 2020 trough. It is followed by 1.2705, 1.2655, and 1.2590, levels dating back to the autumn of 2019. 

Resistance is at 1.2775, which provided support in early March, followed by the recent high of 1.2850 and 1.2975, another cap on the way down recorded on Wednesday.