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  • GBP/USD faced rejection near 100-day EMA and witnessed a dramatic turnaround on Wednesday.
  • A strong pickup in the USD demand turned out to be the only factor exerting some heavy pressure.

The GBP/USD pair dived to fresh session lows in the last hour, with bears now looking to extend the momentum further below the key 1.2500 psychological mark.

The pair failed to capitalize on its recent strong positive momentum and faced rejection near 100-day EMA, around mid-1.2600s. A strong pickup in the US dollar demand exerted some heavy pressure on Wednesday and forced the pair to reverse the previous day’s positive move to five-week tops.

Despite the latest optimism over a steady trend down in the new coronavirus cases and deaths across the world, investors remain concerned over the economic fallout from the pandemic. This eventually extended some support to the USD’s status as the global reserve currency.

The market worries were evident from a fresh leg down in the equity markets, which provided an additional boost to the greenback’s safe-haven status and contributed to the pair’s sharp intraday fall of around 130 pips.

Meanwhile, the British pound was further pressured by the UK Chancellor of the Exchequer Rishi Sunak’s overnight comments that the coronavirus crisis could result in the economy shrinking by as much as 35% during the second quarter of the year.

It will now be interesting to see if the pair is able to attract some dip-buying at lower levels as the focus now shifts to the US macro data. Wednesday’s US economic docket highlights the release of monthly retail sales data and industrial production figures.

The data will be looked upon for fresh clues about the economic damage caused by the COVID-19-induced lockdowns and play a key role in influencing the USD price dynamics. This might help traders grab some meaningful opportunities later during the early North-American session.

Technical levels to watch