NEWS: GBPUSD corrects higher after 200 hour MA stalled the fall April 03, 2020 at 07:35PM


The 1.23038-1.23292 is a ceiling area now
The GBPUSD is moving higher after the 200 hour MA (green line) held support.  The low for the day reached 1.22037.  The pair currently trades at 1.22738 after just reaching a high of 1.2287.

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GBP/USD drops further to 1.2200 amid USD strength

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  • Break under 1.2300 activates correction of last week GBP/USD rally. 
  • Pound pulls back on Friday versus CHF and EUR, USD unaffected by economic data. 

The GBP/USD pair fell to the lowest in a week during Friday’s American session, approaching 1.2200. It bottomed at 1.2200 and then it bounced modestly. A stronger US dollar across the board pushed the pair to the downside.

A terrible reading in the NFP, a surprise positive ISM non-manufacturing report, were ignored by market participants that continue to focus on the very short-term and the economic outlook. The greenback held to gains after the reports and even rose further later. The DXY stands at the highest in a week above 100.70, up 0.55% for the day.

On the contrary, the pound showed signs of weakening on Friday. It is falling versus the Swiss franc and the euro after rising steadily for days. Despite Friday’s correction, the pound is holding to weekly gains versus its main European rivals.

Technical outlook

The GBP/USD “is still suffering from downside momentum on the daily chart and is trading below the 50, 100, and 200-day Simple Moving Averages. However, momentum is off the lows, and the Relative Strength Index has stabilized”, explained Yohay Elam, analysts at FXStreet. Once the 50-day SMA crosses the 200-day SMA, the death cross pattern will be triggered, a bearish sign, warns Elam. “All in all, bears are still in the lead.”

Late on Friday, trades at 1.2220/40, at the 20-day SMA, after breaking to the downside a 4-day trading range. The decline took place after GBP/USD was unable to break the 1.2470/1.2500 barrier.

GBP/USD: Opportunity for the safe-haven dollar to shine

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GBP/USD has been under pressure as coronavirus spreads. US Non-Farm Payrolls and several UK developments are eyed, FXStreet’s analyst Yohay Elam informs.

Key quotes

“The UK death toll has neared 3,000, rising quickly amid a change in methodology, which have been weighing on the pound, and so have the government’s efforts to help businesses, which also seem to fall short.”

“The NFP is set to rock markets and could be another opportunity for the safe-haven dollar to shine. Investors assume that if the US economy suffers, other economies are worse off, and they opt for the world’s reserve currency.”

“The ISM Non-Manufacturing Purchasing Managers’ Index may provide an updated snapshot of how businesses assess the current situation.”

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