On the 4-hour chart, we can see that GBPUSD is testing its previous trend line (from connecting the highs of January 31 and February 25). This price where it is currently trading, around 1.2920, also coincides with the 61.8% Fib level when you draw from the low of February 28 to the high of March 9. There are already a couple of reversal candles which suggest that GBPUSD would soon rally. Near-term resistance is at 1.3045 where the currency pair hit highs on February 13.
For one, there is the roster of economic reports that we have scheduled from the UK today. At 9:30 am GMT, the monthly GDP report for January is expected to print at 0.2%. The Manufacturing Production report for the same month also shares the same consensus. Meanwhile, Industrial Production is eyed to print at 0.3%. Better-than-expected data would be bullish for GBPUSD.
Then at 11:30 am GMT, the Treasury is scheduled to announce its budget for the year. It is expected that the government would present a fiscal stimulus package that would help the economy as it is weighed down by the coronavirus.
Across the Atlantic, the US will release its inflation data. At 12:30 pm GMT, the headline CPI reading for February is anticipated at 0.0% while the core reading is seen at 0.2%.
What could cause drop?
If UK data disappoints or if US data tops forecast, we could see the sell-off extend. A close below yesterday’s low at 1.2880 could mean that GBPUSD may still drop to its February 27 lows at 1.2750.