Daily Market Recap - GBPUSD

The GBPUSD put in its largest daily gain in over 2 months, up 1.22 percent on Tuesday. The British Pound is buoyed by continued optimism surrounding the reopening of global economies and increased demand for risky assets.

The US Dollar index (DXY) which measures the US Dollar against a basket of currencies fell sharply today, dipping below the 100 bar down towards 99.5. Resurging demand for riskier currencies such as the GBP or AUD has put pressure on the safe-haven greenback.

In stock market news, all major global equity indices are pointing higher for the day with the Dow Jones leading the charge at a 2.17 percent increase. Its important to note that the fuel behind the rise in equities is largely due to the aggressive monetary policy approach of late, which may run out of steam as soon as central banks decide to turn off the tap.

The British Pound has been supported by comments from the UK Prime Minister Boris Johnson on Monday that outdoor markets will be reopened June 1st and other non-essential retail businesses will reopen mid-June. The gradual loosening of restrictions to business has prompted investors to speculate over a better than expected recovery from COVID-19.

Over in the US, housing data released today came in better than expected, capping the further upside in the GBPUSD. Analysts were predicting a drop of 21.9 percent in new home sales whereas the actual figure was a slight rise of 0.6 percent.

From a technical perspective, the GBPUSD will be looking to test the 1.23863 resistance level in the coming sessions. A failure to close above will likely condemn the pair to its bearish momentum in the short run. The key support of 1.22793 should act as a pivot point in determining whether the recent gains will be sustainable.

(Chart Source: Tradingview 26.05.2020)

On the downside, sellers will be targeting the 0.618 Fibonacci retracement level at 1.21846. Should the GBPUSD fail to retain its position above the 1.225 marks in the coming session, sellers may look to double down and increase their activity.

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.