GBP/USD: Key Support Turned Resistance At 1.2250

Key Highlights

  • GBP/USD extended its decline below 1.2200 and traded close to 1.2075.
  • A major bearish trend line is forming with resistance near 1.2220 on the 4-hours chart.
  • The UK Claimant count could change 150K in April 2020, a lot more than the last 12.1K.
  • The ILO Unemployment rate is likely to rise from 4% to 4.4%.

 

GBP/USD Technical Analysis

This past week, the British Pound followed a bearish path from well above 1.2400 against the US Dollar. GBP/USD broke the key 1.2250 and 1.2200 support levels to enter a negative zone.

Looking at the 4-hours chart, the pair traded as low as 1.2075 and settled well below both the 200 simple moving average (green, 4-hours) and the 100 simple moving average (red, 4-hours).

Recently, it started an upside correction above the 1.2100 and 1.2120 levels. The pair climbed above the 23.6% Fib retracement level of the key drop from the 1.2466 high (formed on 8th May 2020) to 1.2075 low.

On the upside, there is a crucial hurdle forming near the 1.2220 and 1.2250 levels. The previous key support near 1.2250 is likely to act as a significant resistance. Moreover, there is a major bearish trend line forming with resistance near 1.2220.

To move into a positive zone, the pair must surpass the 1.2220 and 1.2250 resistance levels. In the mentioned case, the pair could recover towards 1.2350 or the 100 simple moving average (red, 4-hours).

Conversely, GBP/USD might fail to continue above 1.2220 or 1.2250 and it could resume its decline. An initial support is near the 1.2120 level, below which the pair might continue to slide towards 1.2075 or 1.2020 in the near term.

Looking at EUR/USD, the pair is still holding the key 1.0800 and 1.0820 support levels. More importantly, gold price extended its rise above $1,760 and traded to a new multi-year high.

Upcoming Economic Releases

  • UK Claimant Count Change April 2020 – Forecast 150K, versus 12.1K previous.
  • UK ILO Unemployment Rate March 2020 (3M) – Forecast 4.4%, versus 4% previous.
  • German ZEW Business Economic Sentiment Index for May 2020 – Forecast 33.5, versus 28.2 previous.