GBP/USD Forecast: Reality check coming to the UK

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2277

Pound resilience to the dollar’s demand began to fade on Friday.
The UK Markit Services PMI plunged to 34.5 in March, worse than previously estimated.
GBP/USD neutral-to-bearish in the short-term, sellers aligned at around 1.2300.

The GBP/USD pair ended the week with losses around 1.2270, although it held at the upper end of its previous weekly range. The pair fell to 1.2204 on Friday amid the resurgent dollar’s demand, although meeting buyers around the level, as the Pound remains resilient. On Friday, Markit released the final version of the UK March Services PMI, which was downwardly revised to 34.5 from a preliminary estimate of 35.7. At the beginning of the week, Markit will release the March Construction PMI for the kingdom, previously at 52.6.

The Sterling may well give up to the UK’s reality in the upcoming days. The number of deaths in the kingdom is doubling on a daily basis, with a health system that was already weak ahead of the coronavirus pandemic. The “herd immunity” government’s approach before changing to lockdown, will take its toll and could force authorities to take tougher measures.

GBP/USD short-term technical outlook

The GBP/USD pair has finished the week just below the 50% retracement of its latest daily decline, after meeting sellers throughout the week just ahead of the 61.8% retracement of the same decline. In the daily chart, the pair is barely holding above a bearish 20 SMA, while technical indicators have lost their strength upward after reaching their midlines. Shorter-term, and according to the 4-hour chart, the pair is neutral-to-bearish, trading below its 20 SMA, while technical indicators hover within negative levels, without clear directional strength.

Support levels: 1.2245 1.2200 1.2160

Resistance levels: 1.2305 1.2350 1.2390

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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