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GBP/USD Daily Forecast – U.S. Initial Jobless Claims Are In Spotlight Again

Vladimir Zernov

GBP/USD Video 09.04.20.

Waiting For The Key Economic Release Of The Week

GBP/USD remains above the 20 EMA level as the market is encouraged by early signs that the coronavirus pandemic is under control and turns its attention to riskier assets.

However, the U.S. dollar is still holding its ground against the broad basket of currencies, and the U.S. Dollar Index is above the psychologically important 100 level.

The condition of UK Prime Minister Boris Johnson, who fights against coronavirus in a hospital, has improved. Boris Johnson is still in intensive care but is able to sit on the bed and talk to medical staff.

Previously, the condition of the Prime Minister did not have material impact on the strength of the British pound. Now that his condition has improved, traders should not expect any influence on GBP/USD.

Several economic releases have already been published in the UK. Construction Output , Industrial Production and Manufacturing Production showed declines year-over-year.

Construction Output declined by 2.7%, Industrial Production declined by 2.8%, while Manufacturing Production took a hit of 3.9%. Investors and traders should note that this is data for February. When the data for March is released, it will look much worse.

The key economic release of the day is the U.S. Initial Jobless Claims. The previous release showed that 6.6 million Americans filed for unemployment benefits.

This week’s release is also expected to show a massive increase in unemployment. The current consensus is that 5.25 million applications were filed, but estimates wary widely.

Previously, markets were able to shrug off negative employment data and focus on first signs of improvements on the coronavirus front. It remains to be seen whether they will be able to withstand the hit from employment data this time.

Technical Analysis

GBP/USD is trading in the range between the 20 EMA at 1.2300 and 50 EMA at 1.2480. The 20 EMA serves as the first material support level for the pair.

If this level is breached to the downside, GBP/USD will likely re-test the recent lows at 1.2170.

The 50 EMA serves as a major resistance level and is located at the local highs which have been tested several times.

If this major level is breached to the upside, GBP/USD will have a good chance to get to pre-crisis levels at 1.2750 and complete the current rebound.

This article was originally posted on FX Empire