Chart of the Day GBPUSD
GBPUSD Bullish - Probable Price Path
After weakness in to the US close last night, risk markets have stabilised again through the night. The Bloomberg USD index gradually worked back towards the current range highs, led by EUR, CHF and GBP this week, while the JPY and NOK have outperformed.
Chinese data this morning saw the Caixin services PMI for March rise slightly to 44.4, but still below 50, unlike official readings. Their trade data saw April imports drop more than expected to 14.2%, while exports were much stronger than expected, rising 3.5%. March Australian exports also showed an increase of 15%.
German industrial production fell by 9.2% in March and French output slipped by 16.2%.In the US, Fed member Bullard said that the US economy needs to gradually reopen to avoid the risk of going into "a financial crisis or even a depression scenario".
The BoE MPC left policy unchanged. The vote was unanimous to leave rates unchanged but two policymakers wanted to immediately increase QE purchases by a further £100bn. The BoE noted that GDP may decline by at least 14% in 2020 but said that after a “temporary” fall the pickup in the economy may be “relatively rapid”. Nevertheless, downside risks remain. New Governor Bailey and colleagues will provide a pre-recorded briefing on today’s decision on the Bank’s website at 10am.
From a technical and trading perspective, the GBPUSD is currently testing the channel support and bids are emerging as 1.2330 continues to attract buyers bullish exposure should be rewarded ona move back through 1.2460 which would flip the daily chart bullish as per the near term volume weighted average price, opening a move to test the 1.28 upside objective. A daily close below 1.23 would invalidate the bullish thesis and open a deeper decline to test the support cluster back towards 1.20
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