Daily Market Recap - GBPUSD

The GBPUSD edged lower on Thursday as a resurgence in safe-haven demand propped up the US dollar. The greenback benefitted from continued lack of clarity over the impact of the coronavirus pandemic on the global economy.

The pair recorded a dip yesterday and failed to capitalize on the upward bounce towards the end of the session. The cable is setting a lower low this afternoon as it reaches the 1.24131 marks. The prevailing interest in the US dollar is illustrated by its index, the DXY, back up above the 100-mark seen in the previous week.

On the macro side, US unemployment data was released today, showing an increase of 5 million first time claimers. The monthly total rises now above 20 million. Analysts were quick to point out that this figure roughly represents the past 10 years of US job creation, sending an alarming signal to the market. However, despite this news, demand for the dollar remains very strong and the GBPUSD barely budged.

The IMF has recently suggested that in light of current conditions, the UK should seek an extension to the Brexit negotiation process which was previously expected to conclude at the end of the year. The news added pressured the pound as another delay will heighten uncertainties in the short term.

On the technical front, the GBPUSD still has a way to go before testing the 50 percent Fibonacci retracement level at 1.2276, which may provide comfort to the bulls out there. However, the pair has failed to remain above the critical 1.25 level has sent signals to sellers that it may be time to push further lower. We can expect sustained bearish behavior in the short term to send the pair down towards the 1.22 psychological/ support level. The resurgence in demand may kick in at that point, considering a breach of the short-term moving average is typically met with some support.

(Chart Source: Tradingview 16.04.2020)

Looking ahead, coronavirus fears will continue to dictate demand for USD and in turn, impact the GBPUSD. On a macro level, the trend remains down for the pair barring any significant depreciation in the USD. Should risk appetite return, GBPUSD will likely stand to gain.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.