GBP/USD: Bulls are back in motion towards 1.2500 ahead of the key day

• GBP/USD defies the previous day’s weakness amid broad US dollar declines.
• A new strategy for testing and reporting UK’s virus data will be up today amid doubts over the previous figure.
• EU sees Brexit talks ‘at an impasse’, Tories think deadline bias will push the bloc.
• US GDP, FOMC will decorate the calendar, virus/Brexit updates will be the key as well.

GBP/USD cheers US dollar weakness while taking the bids to 1.2475, up 0.40% on a day, ahead of the London open on Wednesday. The pair witnessed a pullback on the previous day amid doubts over the UK government’s coronavirus (COVID-19) figures. However, the pre-FOMC, US GDP mood seems to renew the pair’s strength.

While Tuesday’s official death toll of 552 portrays further flattening of the virus curve in Britain, update from the Office of National Statistics (ONS) suggests that the true death toll in England and Wales up to April 17 was 54% higher than the government data.

Identifying that, the Health Secretary Matt Hancock said to include death figures from care homes and in the community. The diplomat also pushed for 100,000 tests a day goal while stating, as per the SkyNews, “testing will be available from Wednesday for those with coronavirus symptoms aged over 65 and members of their households, and workers who cannot work from home – like construction workers and plumbers – and their households.” It was also mentioned that the current capacity of the testing is near 73,000 a day.

Elsewhere, Reuters rely on the diplomatic sources at the Brussels to say that negotiations between the European Union (EU) and ex-member Britain over new trade arrangements from next year are at an impasse due to disagreements and the coronavirus crisis. However, the U’s international trade secretary Liz Truss said, as per the UK Express, “The EU is expected to crumble under pressure and agree to a post-Brexit trade deal with the UK.”

British PM Boris Johnson will likely meet, as per the Sky News, the leaders of the devolved administrations in Scotland, Wales and Northern Ireland to review whether to extend or ease the strict social distancing measures.

On the other hand, downbeat data from the US as well as the fresh US-China tussle, not to forget uncertainty over when to restart the economy, keeps weighing on the greenback ahead of the FOMC and the preliminary reading of the US Q1 GDP. Market consensus suggests that the US GDP figures will spread disappointment with -4.0% contraction versus +2.1% prior. Though, the Fed’s expected pause can help the greenback if Chairman Jerome Powell stays away from conveying his bearish bias, which he is less likely to.

Technical analysis

Given the pair’s ability to stay above a short-term falling trend line from March 09 and 21-day SMA, not to forget the recent confrontation to the 50-day SMA, buyers are set to aim for 200-day SMA, currently around 1.2655. However, a downside break below 1.2415/10 support confluence on a daily closing basis can drag the pair back to the previous week’s low surrounding 1.2250.