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GBP/USD Daily Forecast – All Eyes On U.S. Initial Jobless Claims

Vladimir Zernov

Coronavirus Aid Package Is Approved In The U.S. Senate

The U.S. Senate has finally approved a $2 trillion coronavirus aid package which includes direct payments to U.S. families, $500 billion to help beaten industries, $350 billion for small business loans, $250 billion for unemployment benefits and $100 billion for hospitals.

The U.S. House of Representatives will vote on the package on Friday, and then the bill will be signed by the U.S. President Donald Trump.

The massive coronavirus aid package has supported most markets for several days, but now the attention shifts to incoming economic data. The most important release of the week, which will likely set the near-term trend for the U.S. dollar and other currencies, is due today – Initial Jobless Claims.

The current consensus implies that about 1 million people applied for unemployment benefits, a major increase compared to the previous week’s reading of 281,000.

However, analyst estimates wary widely, and the Initial Jobless Claims number is almost guaranteed to deliver a surprise – positive or negative. A number of more than 1 million will likely provide support for the U.S. dollar as it will cause a flight to safety, while a more modest figure could support the British pound and other currencies.

Meanwhile, the number of coronavirus cases in the U.S. has increased to 69,171, according to the data provided by Johns Hopkins University. At current pace, the U.S. will become the world leader in the number of coronavirus cases in just a few days.

The current trend will make it harder to reopen the U.S. economy by Easter, but could provide some support for the U.S. dollar due to its safe haven status.

Technical Analysis

Yesterday, GBP/USD breached the 1.1800 resistance level and moved to the next resistance at 1.1930 but failed to stay above this level. As I wrote earlier, a move past 1.1930 will open the way to the 20 EMA at 1.2240, although this road can take a significant amount of time.

The U.S. dollar is showing weakness ahead of the Initial Jobless Claims number, and the U.S. Dollar Index has declined below the 101 level. However, this can quickly change depending on the economic data we get so traders will have to pay close attention to GBP/USD moves today.

The nearest support for GBP/USD is at the previous resistance level of 1.1800. Failure to stay above this support will take the pair back to the 1.1700 – 1.18.00 range and create risks for the current upside trend.

This article was originally posted on FX Empire

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