GBP/USD Forecast: Dismal UK data hit the Pound

GBP/USD Current price: 1.2539

• UK monthly GDP shrank a record 20.4% in April, a result of the coronavirus pandemic.
• BOE’s Governor Bailey said he sees some signs of recovery, the UK still in “the midst” of the crisis.
• GBP/USD could recover ground once above the 1.2590 resistance level.

The GBP/USD pair fell to 1.2473, its lowest for the week, as UK data came in much worse than expected. According to the official GDP monthly estimate, the local economy shrank a record 20.4% in April, while the CB Leading Index in the same month contracted 2.9% to 86.5. Finally, Industrial Production in the mentioned period plunged 20.3% MoM and 24.4% YoY. BOE’s Governor Bailey hit the wires on Friday, and he was much more optimistic than macroeconomic numbers, as he said he sees some signs of recovery in most recent gauges of the economy, although adding that the UK is still “very much in the midst of this,” referring to the coronavirus-related crisis. The UK won’t release macroeconomic data at the beginning of the week.

GBP/USD short-term technical outlook

The GBP/USD pair recovered from the mentioned low as the dollar eased with Wall Street’s bounce, ending the day around 1.2540. The daily chart shows that the pair has settled between its 200 and 100 SMA, while the 20 SMA continues heading higher below the current level. Technical indicators ease within positive levels, all of which indicate easing buying interest. In the shorter-term, and according to the 4-hour chart, the bearish potential is limited as the pair bounced from a bullish 100 SMA, while technical indicators began to recover from oversold readings. The 20 SMA, however, has turned lower above the current level. GBP/USD would need to recover above 1.2590 for the bearish case to lose potential.#Currencies##UK##economicindex#

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