GBP/USD unable to recover retreats to 1.1550; down 700 pips from a week ago

The GBP/USD pair on Friday trimmed gains significantly and it was about to end the week with a 700 pip slide. After reaching levels on top of 1.1900, the pound weakened and retreat back under 1.1600. 

The greenback remains strong in the market. The DXY spend most of the day in negative territory but during the American session recovered ground and rose back to the recent high, close to 103.00. It is up 4.10% from a week ago, the best performance in years. Not even lower US yields, or when the equity market posted gains, curbed US dollar’s strength. The pound, on the contrary, remains under pressure, affected by risk aversion. 

Volatility across pound’s crosses is set to remain at extreme levels next week, even if market conditions improve. The coronavirus pandemic and the response will continue to dominate the scene. Regarding data, PMI’s in the US and Europe are due. “After the ZEW and IFO surveys showed sharp declines last week, we look for the PMI to echo this in Germany. For the UK, shutdowns lag the rest of the continent and may not bias the PMI down by as much”, wrote TDS analysts. 

GBP/USD Levels to watch 

“The round level of 1.16 may provide some support. It is followed by 1.1440, the initial trough, followed by 1.1409, the most recent 35-year low. The next significant levels to watch are 1.12 and 1.10”, said Yohay Elam from FXStreet. 

According to Elam, resistance awaits at the post-crash high of 1.1878, followed by the September 2019 low of 1.1957, the round 1.20 level, and then 1.2120 that capped cable before the collapse.