GBPUSD started the week higher amid pressure in USD after the Fed in an emergency move cut the interest rates by 100 basis points to 0.0% – 0.25% in an attempt to combat the coronavirus outbreak impact on the economy. In a coordinated move by central banks across the globe, Fed announced that the Bank of Canada, the Bank of Japan, the Bank of England, the Federal Reserve, the European Central Bank, and the Swiss National Bank took action to enhance US dollar liquidity through existing dollar swap arrangements.
The Fed Chair Powell said that Federal Reserve would keep the interest rates at this level until they are confident that the economy has weathered recent events and is on track to achieve the maximum employment and price stability goals.
The British pound was under severe selling last week amid the sell-off in global markets. Investors are running for to covet in safe-haven assets such as the dollar and Japanese Yen. UK government has taken a different approach to battle coronavirus, allowing the coronavirus to spread to reach “herd immunity.” The UK asked people over 70 years old to stay at home.
GBPUSD is 0.62% higher at 1.2353 rebounding from five-month lows. The technical picture is negative for the pair after the previous week breached below the 100 and 200-day moving average. On Friday, the pair reached an oversold level as the RSI (14) index implies, and a rebound can’t be ruled out.
On the upside, resistance is seen at 1.2424 the daily top. If the pair breaks higher, the next resistance level would be met at 1.2623 the high from Friday’s trading session. More offers would be met at 1.2702 the 200-day moving average.
On the other side, the immediate support for the GBPUSD stands at 1.2262 the daily low. The next support area would be met at 1.2203 the low from October 10, 2019. A break below might attract more bears to join the action for a move down to 1.2082 the low from September 4th, 2019.