GBPUSD WEEKLY ANALYSIS – Price Action Breaks Below Trend-line; Potential Downward Momentum Ahead

GBPUSD WEEKLY ANALYSIS – Price Action Breaks Below Trend-line;
Potential Downward Momentum Ahead  

Following the previous report on GBP/USD, price action successfully
broke below its upward trend-line. However, the previous candle closed with a
‘hangman’ pattern at the 38.2 Fibonacci level near 1.2240. Further confirmation
of a breakout below the 38.2 Fibo requires today’s candle to close below
1.2240; or better yet closing lower than yesterday’s lowest point near 1.2150.
A breakout confirmation then suggests the pair to extend its losses towards the
23.6 Fibonacci level near 1.1950.

The pair continues to trade below its 20EMA (red) and 60EMA (green);
with the 200EMA (blue) also curving to the downside. MACD, with a death-cross
formation, showing a build-up in its bearish momentum, signaling further
downside potential for the pair.

From the fundamental front, during the speech from the Bank of
England (BOE) led by Governor Andrew Bailey on Thursday, he reiterated that
UK’s economy is facing an inevitable major downturn and signaled that it is
reasonable to re-open the economy soon. ‘Scarring in the economy from the
downturn is certain, but uncertain of how much’ commented by Bailey.  

On the bright side, the BOE did mention that the adoption of
negative interest rate is not something that they are planning for as it
requires an extensive communications exercise in the country. However, the bank
is ready to work with the government in providing further stimulus to support
the downfall of its economy.

In an overall view, the impact and uncertainties of the COVID-19
pandemic continue to be the main barrier for the global economy to recover
despite actions taken to provide support from countries across the world. The
market remains restless until an effective vaccine is available; until then,
governments and central banks can only provide further stimulus to prevent the
economy from crashing any further. 

As the whole world continues to fight against the COVID-19 pandemic,
Regain Capital wishes to remind all readers to constantly wash your hands, keep
social distancing, drink sufficient amount of water and stay safe!