GBPUSD Gives Up Gains on Coronavirus Fears But Technicals Suggest a Potential Rally

GBPUSD
GBPUSD

GBPUSD initially traded higher during the Asian session on profit-taking but the currency pair is now under selling pressure as risk aversion once again creeps in. The currency pair has fallen from an intraday high of 1.1713 and is currently trading at 1.1630, below its open price at 1.1669.

As with the past few weeks of trading, fears of the coronavirus pandemic is once again dominating market sentiment. The total number of confirmed cases globally has gone over 339,000 with the death toll over 14,700. It also does not help GBPUSD that investors perceive the UK’s actions towards containing the coronavirus as ineffective. Last week, UK Prime Minister Johnson announced that the government will adopt a ‘herd immunity’ approach to the pandemic. This means that they will wait for the general public to get immune to the infection.

However, earlier today, the country’s health minister announced that the country is ready to take on more action. The big question is, when?

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GBPUSD Outlook

On the 4-hour time frame, it can be seen that GBPUSD has recently broken through resistance at the falling trend line (from connecting the highs of  March 11, March 12, March 13, March 17, and March 18). The weakness on the currency pair as of late has pushed it lower to retest the broken trend line for support. As of this writing, GBPUSD is testing the area between the 50% and 61.8% Fib levels around 1.1640 (by drawing the Fibonacci retracement tool from the low of March 20 to its intraday swing high). If there are enough buyers in the market, we may soon see the currency pair trade higher to its recent highs at 1.1933.

On the other hand, a close below today’s Asian session lows at 1.1531 could mean that there is more downside potential. GBPUSD could drop to last week’s low at 1.1409.

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