Figure 2: The GBPUSD on a daily chart
The key levels of support and resistance are as follows:
Resistance 1 is at the level of 1.2620-1.2650.
Resistance 2 is in the zone 1.2700 - 1.2750. At the same time, this is near SMA 100 moving average that often reacts as resistance.
Resistance 3 is in the range of 1.2800 - 1.2850. Here, there is Fibo 78.6% of the FH movement. At the same time, there is the upper edge of the hidden gap on the candlestick that formed on March 12, 2020.
Support 1 is located in the range of 1.2150 - 1.2230.
Support 2 is in the range around the level of 1.1980 - 1.2000. Here, there is the bottom edge of the hidden gap on the candle dated March 26, 2020.
Support 3 is around 1.1400 - 1.1470.
Additionally, we present the overall sentiment of the market, which according to the report COT (Commitment of Traders), which is presented every Friday, brings the following information:
||Data as at 8.5.2020
||Data as at 1.5.2020
||Data as at 24.4.2020
||Data as at 17.4.2020
||Data as at 10.4.2020
Last week, big speculators again reduced the overall position on the British pound. This is the ninth decline in a row, so bearish sentiment prevails on the pound. Speculators, on the other hand, strengthened their overall net position against the US dollar again for the seventh week in a row, which, despite poor macroeconomic data in the US, confirms that the dollar serves as a strong reserve currency in times of crisis.
What awaits us this week?
Concerning Brexit, another round of negotiations on a trade agreement should take place this week.
From a macroeconomic data point of view, Britain will report GDP data for 1Q 2020 on Wednesday, where a decline of -2.1% is expected on a year-on-year basis. Data on the trade balance and manufacturing production will also be reported.
In addition, further developments in the spread of the coronavirus disease and the measures taken in this regard need to be monitored on an ongoing basis.
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