GBPUSD gives up all of yesterday gains and breaks below the 50-day moving average amid USD strength across the board. The Budget Responsibility Office (OBR) said that the UK economy could contract by 35% in the Q2 of this year. Yesterday, Britain’s finance minister warned that the UK economy could shrink by 30% in the second quarter amid the coronavirus lockdown.
Investors await the US retail sales for fresh clues on the damage the coronavirus made on the US economy. The economic data point to one of the worst recessions in history for Great Britain amid the coronavirus crisis. Now the global recession is inevitable, after the disastrous data from the USA and other European countries the previous week.
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GBPUSD Price Analysis
GBPUSD is 0.94% lower at 1.2506, cancelling the recent positive momentum after the pair failed to pierce above the 200 days moving average yesterday. Today the pair pierced the 50-day moving average and sellers are taking control targeting levels below the 1.25 mark. The technical picture remains negative as long as GBPUSD stays below the 50-day moving average.
On the downside, support stands at 1.2487 the daily low. In case of a break below the daily low, the pair price could correct lower towards the 1.2448 in the near term, the April 13 low. If GBPUSD continues lower, the next support area would be met at 1.1287 the low from April 8.
On the other side, the first resistance for the pair stands at 1.2630 the daily top. The next hurdle would be met at 1.2650 the 200-day moving average. A successful move above the 200-day moving average is likely to open the way for a bigger move to the next resistance at 1.2852 the high from March 12 trading session.