Hello, dear traders!
As already noted in today's article on EUR/USD, the US currency was under serious selling pressure on Monday. The GBP/USD currency pair was no exception, which showed growth and closed yesterday's trading at 1.2190.
Today, the strengthening of the British currency continues. Data on the UK labor market has already been released. Thus, the number of applications for unemployment benefits significantly exceeded the forecasts of 676.5 and amounted to 856.5 thousand. But the unemployment rate fell quite unexpectedly and turned out to be at the value of 3.9%, although the indicator was forecast at 4.4%.
As for the removal of restrictions on COVID-19, the British poured into the streets of cities, almost filling them. In this regard, the Cabinet of Ministers of the United Kingdom, headed by Boris Johnson, who has already been ill with a coronavirus infection, warns citizens against mass gatherings by imposing quite significant penalties.
In the United States, President Donald Trump continues to demand the immediate lifting of the quarantine and suggests that the US has reached a plateau. As it became known, Trump himself has been using an antimalarial drug called "Hydroxychloroquine" for about ten days.
Trump's attitude to quarantine measures has long been known and understandable. He needs an early restart of the economy and its recovery because the US presidential election is not far off, at which the current president really wants to be re-elected for a second term and remain in the oval office. And then, as luck would have it, this coronavirus, and a quarantine that is simply suffocating the world's leading economy! Naturally, in such circumstances, Trump is trying to shift all the blame for the rampant worldwide pandemic to China and the World Health Organization (WHO), because the great power led by him continues to confidently lead in the number of infected COVID-19 in the daily measurement.
Daily
If you go to the technical picture for GBP/USD, then at the time of writing this article, the British pound continues to strengthen yesterday against the US dollar and is trading near 1.2245.
However, it is worth noting that in the area of 1.2270-1.2288, the pair risks encountering very strong resistance, represented by the Tenkan line of the Ichimoku indicator and 50 simple moving average. Slightly higher, at 1.2310, is the lower border of the Ichimoku day cloud, and at 1.2360, the Kijun line. I believe that only closing the session above 1.2360 will create prospects for growth to higher prices. However, it is too early to talk about more distant landmarks. At the moment, the pound/dollar pair is correcting to the previous weekly fall. In addition, it is unknown how long the US dollar will remain in disfavor with investors. Once again, I would like to draw your attention to the fact that the market situation has been changing frequently and quite rapidly recently.
H4
In this timeframe, we see that the pair has reached the brown resistance line 1.2641-1.2465, which is directly below 50 MA, and slightly above 89 EMA. Even higher, at 1.2363, there are 200 exponentials.
It is also worth paying attention to the 38.2 and 50.0 levels of the Fibonacci grid, stretched to a decrease of 1.2641-1.2073. These levels, along with the moving averages and the brown resistance line, can block the pair from further northward movement and turn the quote down.
Despite the current weakness of the US currency, sales of GBP/USD still remain the highest priority positioning. If bearish candle analysis patterns appear in the area of 1.2270-1.2300 and (or) near 1.2350, this will be a signal to open short positions on the pound. It is more aggressive and risky to try selling from the indicated prices without waiting for candle signals. It is not a fact that they will appear.
Since there are many strong resistances at the top, I recommend that you refrain from buying for the time being.
Good luck!
