Pound stays weak, whilst US Dollar is firm amid COVID-19 chaos – GBPUSD Forecast

Intermediate
  • An extremely aggressive selloff by Cable (GBPUSD) over the past week, primarily reflecting US Dollar strength, with the US currency being seen as a safe haven in these times of crisis.
  • Not only is the US Dollar a safe haven, but an apparent global US Dollar shortage has seen the US currency even rallying against the usual, go to safe haven, the Japanese Yen.
  • In addition, the GBP Pound seems to be suffering particularity, with the UK having room to cut rates maybe further and possibly restart Quantative Easing (QE), after last week’s Bank of England intermeeting cut.
  • The combination of these has seen GBPUSD plunge, with risk to some key downside levels not seen since Q3 2019 during the Brexit chaos.

GBPUSD day trade outlook: Bearish theme intact

An erratic Monday but still a probe lower to just hold above key 1.2197 support, a rebound failure to retain bear forces from Friday’s more aggressive plunge through numerous supports after Thursday’s surrender of key 1.2725 support (to shift the intermediate-term bull trend straight to a bear trend), to keep the threat lower into Tuesday.

·       We see a downside bias for 1.2202 and key 1.2197; a break below aims for 1.2081 and 1.2000, maybe key 1.1958.

·       But above 1.2330 targets 1.2373, which we would look to try to cap; above opens risk up towards 1.2423.

GBPUSD intermediate-term outlook

We see an intermediate-term bear trend with the break below 1.2725.

·       Downside risks: We see risks for 1.2197, 1.2000 and 1.1958.

·       What changes this? Above 1.2977 switches the intermediate-term bull trend to neutral and above 1.3200 to a bull trend.

Daily GBPUSD Chart

gbpusd chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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