GBPUSD WEEKLY ANALYSIS – SIGNIFICANT CHANGE IN MARKET SENTIMENT

GBPUSD WEEKLY ANALYSIS – SIGNIFICANT CHANGE IN MARKET
SENTIMENT 

Following the previous report on GBP/USD, the pair successfully
rebounded from its lowest level previously reached three decades ago, near the
support of 1.1640. The pair managed to pare most of its losses suffered
throughout last week to retest its resistance level near 1.2300. If the pair
manages to break above its resistance level, it would indicate a shift in the
long-term trend for the pair.

In terms of MACD, bearish momentum exhausted, with a golden cross
formation signaling the further upward potential for the pair after
successfully breaking above the resistance level. In terms of the EMA, it is
trading near its 20EMA, where the closing of Friday’s candle above it would
provide further confirmation altogether with the MACD. 

From the fundamental point of view, the dollar index suffered a
major plunge throughout this week, allowing major currencies paired against the
dollar to rebound from record lows. As the market was digesting the news of
economic stimulus package offered by central banks and governments across the
world last week to support the downfall in their economies, investors’
confidence was still solidly built towards the dollar.    

However, investors preference and market sentiment shifted inversely
after the US announced its economic stimulus package of $2 trillion, passed by
Congress on Thursday. Furthermore, the Fed also removed the limit on its
Quantitative Easing program, signaling a massive inflow of greenback into the
market. Investors’ confidence towards the dollar fell further following the
recent release of US unemployment claims, which reported a total of 3.28M
unemployed individuals making the claims.

The impact of the Covid-19 has affected the US labor sector first,
while investors wait for further economic data to gauge the effect on other
areas as well. The country now has the highest number of affected cases,
standing at 85,594 as of writing, surpassing China, with only 81,340 affected instances.  

The bad news arising from the US ended the dollar index violent
rally in the past two weeks, as the market now slowly corrects itself, allowing
pairs such as the GBP/USD to pared most of its losses suffered previously.
However, overall market sentiment remains uncertain, with fears of the Covid-19
still lingering with no up-to-date cure or vaccine available.

Regain Capital wishes to remind all readers to continually wash your
hands, keep social distancing, drink a sufficient amount of water, and stay
safe!