Search ForexCrunch
  • GBP/USD witnessed a dramatic intraday turnaround amid some heavy USD selling.
  • Traders looked past the news that the UK PMI Johnson was moved to intensive care.
  • Concerns over the economic fallout from the coronavirus pandemic might cap gains.

The selling bias around the greenback picked up pace in the last hour and lifted the GBP/USD pair to fresh session tops, around mid-1.2300s.

Following an early fall to 1-1/2 week lows, the pair witnessed a dramatic turnaround and rallied nearly 200 pips from an intraday low level of 1.2164 amid some heavy US dollar long-unwinding trade.

The latest optimism over a slowdown in the number of new coronavirus cases in the United States, Italy and Spain led to some follow-through rally in the equity markets for the second straight session.

The risk-on mood eventually weighed heavily on the greenback’s perceived safe-haven status and was seen as one of the key factors driving the pair higher through the early European session on Tuesday.

As investors took cues for signs of a peak in the coronavirus pandemic, the GBP bulls seemed rather unaffected by the fact that the UK Prime Minister Boris Johnson was moved to intensive care overnight.

Meanwhile, the UK Cabinet minister Michael Gove was out with some comments in the last hour and said that any decision on lifting lockdown, containment measures may be a bit too soon for the UK to consider.

This comes amid growing concerns over the economic fallout from the coronavirus pandemic, which might revive the USD’s demand as the global reserve currency and keep a lid on any runaway rally for the pair.

Hence, it will be prudent to wait for some strong follow-through buying before traders start positioning for the resumption of the pair’s recent strong recovery from the 1.1400 mark, or 35-year lows set on March 20.

Technical levels to watch