The GBP/USD currency pair extended its previous session losses and dropped below 1.2500 level while representing 0.30% losses on the day as the second wave of the coronavirus (COVID-19) exerted downside pressure on the risk sentiment which weakened the Briitish Pound and contributed to the currency pair declines.
The broad-based US dollar modest gains also kept the currency pair under pressure. The GBP/USD is trading at 1.2498 and consolidates in the range between the 1.2455 - 1.2526. However, the traders are cautious about placing any strong position ahead of UK PM Boris Johnson's Brexit meeting with the European policymakers.
As per the latest report, Japan has reported numbers of COVID-19 cases rose by 47, the highest level since May 05. On the other hand, Beijing has started to re-impose the restriction on the market after the increase in the virus cases around the Xinfadi food market in the Southern Fengtai district. Be it rising COVID-19 cases in the US and Tokyo or the recall of the partial shutdowns in China, the fears of the second wave initially boosted the risk-off market sentiment. Apart from this, the on-going dispute between US President Donald Trump and the state governors, due to the latest protest in America, also exerted some downside pressure risk sentiment.
At the USD front, the broad-based US dollar started to erase its early-day losses and took modest bids due to fears of a second wave of the Covid-19 virus, particularly in China. Whereas, the dollar index, which tracks the greenback against a basket of six other currencies, was up marginally at 97.332 At 3:10 AM ET (0710 GMT).
On the positive side, the further easing of lockdowns in Britain by the UK PM Boris Johnson turned out to be one of the key factors that kept a lid on any additional losses in the pair, at least for now. The World Health Organization's (WHO) Regional European Director Hans Kluge recently criticized the Britain speed of easing lockdown restrictions. But the UK PM Boris Johnson did not give any significant heed to it. Also, British leader Johnson seems to ignore the rules about two-meter distance during the latest wave of the economic restart.
Daily Support and Resistance
Support Resistance
1.2482 1.2538
1.2456 1.2568
1.2426 1.2593
Pivot Point 1.2512
The GBP/USD pair is testing double bottom at 1.2512 level, and a bearish breakout of 1.2515 level can extend selling bias until the next support level of the level of 1.2360. Technically, the GBP/USD is trading with a bearish bias as the 50 EMA and the RSI is holding in a selling zone. However, the closing of a series of candles over 1.2530 level is likely to drive bounce off in the market until 1.12600 level. Consider taking a selling trade over 1.2510 level, but we should immediately look for selling bias once the 1.2510 level gets violated to target 1.2360. Good luck!