GBPUSD Trades Lower on Coronavirus Concerns; UK PMIs Eyed Ahead

Just like most major currencies, GBPUSD finished Friday’s trading lower as concerns about the coronavirus pandemic caused risk aversion. The currency pair fell from an intraday high of 1.2455 and closed at 1,2348, down from its opening price of 1.2422.

Latest reports all from all over the world imply that the fight against the coronavirus is still far from being over. The number of cases in the US continue to climb, Germany’s infection rate trickled higher, and Australia is rolling back some of the looser measures it implemented. Despite the UK moving forward with easing restrictions further on Tuesday, GBPUSD was not spared by risk aversion. The dollar strengthened against most of its counterparts as the recent pandemic-related developments triggered a flight to safety.

Tomorrow, the UK PMI reports will be released and could provide GBPUSD with support. The forecast is for the services PMI for June to print at 39.1 while the manufacturing PMI is seen at 45.2. Better-than-expected figures could push GBPUSD higher while disappointing readings could further weigh down the currency pair.

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GBPUSD Outlook

On the 4-hour time frame, it can be seen that GBPUSD has broken support at the rising trendline from connecting the lows of May 15, May 25, May 27, and June 15). Additionally, the currency pair is also trading below the neckline support of the head and shoulders pattern.

When you enroll in our free forex trading course, you will learn that it is not unusual for markets to retest previous support levels for resistance. A strong close above the 200 SMA at 1.2410 could soon mean that GBPUSD is on its way to test the confluence of resistance at 1.2515. This price coincides with the previous neckline as well as the 50% Fib level (when you draw the Fibonacci retracement tool from the high of June 16 to the low of June 22).

On the other hand, a close below today’s low at 1.2334 could mean that sellers continue to dominate market sentiment. We could soon see GBPUSD fall to its May 15 lows at 1.2080.

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