GBP/USD Pares Losses As UK Gov Warns Of Further Restrictions, Fed Acts
Fiona Cincotta March 23, 2020 12:23 PM
Stricter measures to come. Fed announces unlimited QE
GBP/USD is trading lower in early trade, although off session lows, as UK government steps up its response to the coronavirus outbreak and the UK prepares itself for an Italian style lock down amid a jump in the number of coronavirus deaths.
Whilst the pound is maintaining losses of 1% versus EUR, GBP has pared some losses versus the USD. But this is a USD weakness story
The USD dropped sharply after the Fed committed to unlimited purchases of US Treasuries and agency mortgage backed securities in addition to setting up additional lending tools to struggling companies. The move cane after the Fed slashed interest rates to near zero last week. The Fed really has thrown the kitchen sink at the problem; however, it hasn’t stemmed the decline of cable.
Levels to watch
GBP/USD has picked up from session lows following the Fed action but is still trading lower. At the time of writing GBP/USD is trading -0.4% at $1.1610 as it looks to attack the 50 sma on the 1hr chart.
Resistance can be seen at $1.1635 (50 sma) prior to $1.1715 (today’s high) prior to $1.1745 (100 sma) and $1.1938.
Support can be seen at $1.1506 (today’s low) prior to $1.1435 (35 year low 19th March).
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.