GBPUSD – Probable Price Path
There was a modest improvement in risk appetite on markets yesterday. This was built on hopes that coronavirus restrictions may be eased soon. In the US, President Trump announced guidelines last night for reopening the US economy. Some German car factories also intend on restarting production next week. In contrast, the UK confirmed a 3-week lockdown extension. Against the slightly less risk averse backdrop, US equities managed to eke out some minor gains. At the close on Wall Street, the S&P 500 was 0.6% higher. On this side of the Atlantic, investors were more cautious, with the Euro Stoxx 50 finishing flat on the day. Data-wise, US weekly jobless claims rose by 5.2m (f’cast 5.1m) in the week ending 11th of April. Claims have now risen by circa 22m in the past four weeks. Such a rapid deterioration in labour market conditions is unprecedented. Overnight, it was confirmed that the Chinese economy shrank by 9.8% qoq in the opening quarter. However, while the contraction was massive, it was largely in-line with expectations. As a result, there was limited impact on markets, with the main Asia-Pacific equity indices trading higher. Today, it will be interesting to see if the improvement in risk appetite holds in place. Further announcements of the easing of coronavirus restrictions may act as a tailwind in this regard
From a technical and trading perspective, GBPUSD looks poised to test symmetry swing support sighted at 1.2350 short positions should be carefully monitored as this area is probed buyers reestablish control here then we could get a final leg higher in the this first phase of a broader and more sustained corrective pattern. Bullish reversal patterns from 1.2350 would set sights on a test of 1.29 from where bears will be watching for selling pressure to set a local reaction high and a correction back towards 1.22, before setting a base for a another leg higher
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