GBP Is Testing a Monthly Resistance: Could the Pound Break It?
- The pound is facing strong resistance to the 1.2575 level
- Rishi Sunak is ‘deeply troubled’ by OBR warning of 35% fall in UK GDP
- GPB appreciated over the last few days amid Boris Johnson’s recovery
Monthly Time Frame:
Clearly modelled on the chart below, you can see that the pound has been ranging since May 2018.
It could not break both the 1.3530 & 1.1958 levels which have been acting as resistance and support respectively.
Another level which is significant and considered a key level is the 1.2576 level.
This horizontal blue line is acting as a support and resistance at the same time. Recently, it has been acting as a resistance where the pound could not surpass it to move upward.
4-Hr Time Frame:
Moving now to the 4hr time frame, the GBP/USD could not break the blue resistance. Another, signal that the bearish are taking control, the MACD is showing a hook where the blue signal has crossed the red signal from the top.
Additionally, the white uptrend was broken which might push the pound into a sharp drop soon.
On Tuesday, the Chancellor of the Exchequer stated that he was deeply worried after the OBR (Office for Budget Responsibility) warned that the UK economy could drop by 35% along with 2 million job losses.
The OBR stated that each additional month of a shutdown could cost England 45 billion pounds of additional borrowing.
“A forecast by the UK’s tax and spending watchdog suggests the coronavirus crisis will have “serious implications” for the UK economy”
Chancellor Rishi Sunak
With the continued increase of daily deaths in the UK, the pound is under pressure to depreciate in the next weeks. The NHS is overwhelmed, which is a serious problem for the British government and added financial stress.
Today, April 16 the policy makers will gather to choose whether or not to extend the lockdown period.
In other words, they will be choosing between saving the economy or their citizens. This will obviously have knock on effects to the GBP.