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GBPUSD - Returns Back Above 1.30 as BOE Weighs in on Coronavirus

   

 

GBPUSD - Returns Back Above 1.30 as BOE Weighs in on Coronavirus
 
In the last few days or so the GBPUSD has rallied back from a two month low to back above the key 1.30 level including a little surge higher in the last 24 hours. There isn’t much more to add about what the GBPUSD has been doing recently as it continues to trade around this key level. In the last few weeks the 1.30 level has been under pressure as the GBPUSD eased away from a two week high above 1.32 on two occasions and both times looked poised to move lower through 1.30 before some support kicked in which has held it up well.

It has shown some more volatility of late when it surged higher to its highest level in more than 18 months above 1.35 before falling sharply back down to the current key level of 1.30 which has been significant for the last three months.

If the GBPUSD continues to rally higher off the support at 1.30, it may face potential resistance around 1.3250 and the 18 month high around 1.35. The 1.30 level again remains key and will be closely watched to see if the support holds up or the sterling returns below and meets resistance at that level again. In early December, the GBPUSD broke through the resistance level at 1.30 and moved to a nine month high just above 1.32, before the surge higher to above 1.35. For the prior six weeks or so the GBPUSD had traded in a narrow range consolidating under resistance at 1.30, which has become a level of significance, and as expected is now offering support now that the sterling has declined.

Earlier in the range, the GBPUSD eased ever so slightly from a five month high just above 1.30 after smashing through the key 1.25 level which has resisted prices strongly for around a month. It had also received some support from 1.28 during this period of consolidation. The 1.25 and 1.28 levels may play roles again should the sterling decline from its current highs.

Only last week the U.S. Federal Reserve (Fed) chimed in on the current coronavirus declaring they remain very aware of it and its possible impact on China and the rest of the world.  Fed Chairman Jerome Powell said, "Uncertainties about the outlook remain, including those posed by the new coronavirus.  There is likely to be some disruption to activity in China and globally" from the virus.  Now the Bank of England (BOE) have taken their turn and made public comment about the latest pandemic.  BOE Governor Mark Carney said to the House of Lords economic affairs committee that the economic impact of the coronavirus is already bigger than that caused by the SARS pandemic in 2003.  "While there are some signs of slowing in the pace of infections in China itself, it's still very, very early days.  This is, from an economic perspective, already bigger than SARS and it is just too early to say the overall macroeconomic impact,” he said.  Mr Carney remains confident that U.K. banks are resilient enough for any jolt to the country’s economy after stress tests.  He added, "In general, the experience has been with pandemics that they can have quite significant impacts but much of it is recovered in subsequent quarters."

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