Home Forex News GBP/USD Inches Higher As Market Sentiment Improves and Oil Prices Stabilize

GBP/USD Inches Higher As Market Sentiment Improves and Oil Prices Stabilize

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  • GBP/USD moves 0.1% higher hitting intraday high of $1.2387
  • Brexit talks resume ahead of June deadline
  • Timid PMI data impacts GBP/USD

The GBP/USD moved 0.1% higher to $1.2306 as market sentiment improved with also oil prices stabilizing. The currency pair hit an intraday high of $1.2387 as the pound shed most of its gains against the dollar as timid April PMI readings and concerns of the COVID-19 pandemic continue to impact on the UK economy.

Brexit could put downward pressure on GBP

Besides the current COVID-19 crisis, there are also concerns about Brexit ahead of the June deadline which has turned the focus of currency traders back to the UK pound. Britain has indicated that the talks for a Brexit trade deal don’t materialize then it will walk away at the end of the year pout of the EU without a deal. The Brexit move is expected to significantly impact the UK economy with the budget watchdog warning of the worst recession in three centuries.

The UK composite PMI dropped from 36.0 in March to 12.9 with the drop indicative of a contraction in the economy. This adds to concerns on whether financial bailout from the government could get to businesses in time.

Analysis of GBP/USD

On Thursday the pound was up 0.4% against a weaker dollar at $1.2385. However against a stronger euro which also experienced worse than anticipated PMI data the pound was rose 0.4% to 87.43 pence.

Negative PMI data could put downward pressure on the exchange rate. However, the lack of response from the pair to the uninspiring PMIs appears to signal the warnings. Therefore in the near term, projections will exert downward pressure on GBP/USD. The pair has limited by strong resistance at $1.2344 with the next cap being at $1.2389. It has formed support at $1.2319 with stronger support waiting for at$1.2280.

Time                            : 24-04-2020

Pivot                            : 1.2358

Technical View              : Short position below 1.2358

Target                          : 1.2318

Comments                  : The GBP/USD is currently under downward pressure

Last Price                   : 1.2355

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