The GBPUSD pair declined by 30 basis points on overall strength of the US dollar. In contrast, the US dollar index, which measures the performance of the dollar with a basket of other peer currencies rose by 20 basis points.
The US dollar rose amid a series of negative economic data from the US. For example, data from the country showed that more than 5.2 million Americans enrolled for unemployment benefits in the previous week. This means that more than 22 million people have lost their jobs in the past four weeks alone. Therefore, most investors rush to the US dollar and other safe havens when the economic situation worsens.
Meanwhile, the British pound also declined because of the rising number of coronavirus-related deaths in the country. The disease has infected more than 103,000 people in the country and killed more than 13,000 and the number is rising. As a result, the government extended the current lockdown by three more weeks.
When announcing the new measures, Dominic Raab, who is acting for Boris Johnson said that the country would asses its relationship with China. He said:
“We ought to look at all sides of this and do it in a balanced way, but there is no doubt we can’t have business as usual after this crisis.”
Friction between the UK and China would have dire consequences at a time when the country is negotiating a deal with the EU. It would be damaging because the two countries do trade worth more than 70 billion pounds per year.
On the daily chart, the GBPUSD pair, which was in a bullish trend has found some significant resistance at the 100-day exponential moving averages (EMA) level of 1.2645. This means that bulls are struggling to push the price above this rejection level.
In addition, a bearish engulfing candle happened on Wednesday and was followed by another bearish candle yesterday. The third candle is forming today, which means that the pair will likely continue falling. If this happens, the pair will move lower and test the 50% Fibonacci Retracement level at 1.2275.
This Fibonacci was drawn by connecting the highest and lowest swings in March.