GBP/USD Forecast:  Sterling ready to stumble amid depressing coronavirus data, lost momentum

• GBP/USD has kicked off the new quarter on the back foot amid a gloomy mood.
• Coronavirus headlines and critical US figures are in the spotlight
• Wednesday’s four-hour chart is showing upside momentum is lost.

Zoom seems to be the world’s preferred tool for videoconferencing – including for Prime Minister Boris Johnson chaired the first-ever digital Cabinet meeting. Investors are zooming in coronavirus figures – which are becoming more worrying in the UK and weighing on the pound.

The number of Covid-19 infections has topped 25,000 in the UK, with deaths nearing 1,800 – a leap of around 27% on Tuesday. Moreover, some warn of inconsistencies in counting methodologies that may make counting more tricky. Britain remains on a relatively quick trajectory over a week after the nationwide lockdown was announced.

A flatter coronavirus curve could boost the pound while an ongoing upward trajectory would weigh on sterling.

The picture is not brighter in the US, where new estimates released by the White House show a range of between 100,000 to 240,000 mortalities. President Donald Trump prepared the country for two painful weeks. The total number of US cases is near 190,000, with over 4,000 that have lost their lives. Hospitals in New York – the epicenter of the disease in America – are coming under pressure.

While not all US states are in lockdown, the economy has already taken a hit. After last week’s weekly jobless claims skyrocketed above 3 million, ADP’s private-sector labor market figures for March are projected to show a loss of 150,000 jobs. America’s largest payrolls providers figures are not always fully correlated with the official Non-Farm Payrolls report published on Friday but are set to rock markets.

See ADP Non-Farm Payrolls Preview: The job onslaught begins

GBP/USD has been trading wildly on Tuesday, as end-of-quarter flows triggered high volatility. As a new month begins, the dust has settled, and GBP/USD may rise and fall according to the market mood. A depressing statistic from ADP may push stocks lower and the safe-haven dollar higher.

Another top-tier indicator awaits traders later – the ISM Manufacturing Purchasing Managers’ Index. Economists are expecting a relatively moderate fall to 45 points – reflecting contraction but not an outright depression. The employment component serves as a hint towards Friday’s jobs report.

See ISM Manufacturing PMI Preview: Markets return first, factories second?

Markit’s Final Manufacturing PMI will likely confirm the score of 48 points – marginally below the 50-point threshold that separates expansion from contraction.

Overall, a busy day including disease headlines, economic figures, and market mood swings, will likely move pound/dollar.

GBP/USD Technical Analysis

Momentum on the four-hour chart has all but disappeared – a bearish sign. The currency pair is trading below the 200 Simple Moving Average but above the 50 and 100 SMAs.

All in all, the picture has worsened.

Support awaits at 1.2310, a temporary support line early in the week. It is followed by 1.2240, the weekly low, followed by 1.2130, a stepping stone on the way up.

Resistance awaits at 1.2440, which held GBP/USD down early in the week. 1.2485, Friday’s high point follows it. The next line to watch is 1.2610.