GBP/USD drops further to 1.2000 and rebounds

• US dollar continues to outperform despite the recovery in Wall Street. 
• Volatility persists at extreme levels as governments across the globe announce stimulus measures. 

The GBP/USD pair dropped further and bottomed at 1.2000, reaching the lowest intraday level since early September. From the bottom, it bounced around 50 pips and as of writing, was trading at 1.2045, still down more than 200 pips for the day. 

The pound remained under pressure versus the US dollar, but on Tuesday it found some support and stabilized against the euro and the Swiss franc. The greenback is rising across the board, even against emerging market currencies despite the recovery in Wall Street. The DXY was up 1.40%, above 99.50 and looking into February highs. 

In the US, President Trump and Treasury Secretary Mnuchin announced fiscal stimulus measures. “We’re looking at sending checks to workers immediately, within next two weeks”, said Mnuchin and added that relief figures “may be bigger” than what’s in the press ($1000). Te press conference helped equity markets and pushed the Dow Jones to session highs. 

Markets concerns about the economic impact of the coronavirus offset US and UK economic data. Also, recent events leave those numbers outdated. 

From a technical perspective, the GBP/USD found support at the strong and psychological 1.200. A break lower would add more pressure, exposing 1.1954 (February low) and then 1.1900. On the upside, immediate resistance might be seen at 1.2080 followed by 1.2135. 

GBP/USD More levels