GBP/USD Outlook (20 May 2020)

Overall, GBP/USD is trending downwards. Recently, GBP/USD trended higher into the resistance level of 1.22400.

The UK employment data released yesterday indicated a massive rise in the number of people claiming for unemployment-related benefits back in April. The average earnings index and the unemployment rate were not affected as badly since the data are based on interviews that took place from January to end March 2020, thus not capturing the full impact of the implementation of COVID-19 lockdown and social distancing measures.

• Claimant Count Change (Actual: 856.5K, Forecast: 675.0K, Previous: 12.1K)
  
• Average Earnings Index 3m/y (Actual: 2.4%, Forecast: 2.7%, Previous: 2.8%)
  
• Unemployment Rate (Actual: 3.9%, Forecast: 4.4%, Previous: 4.0%)
  

The UK CPI y/y data will be released later at 1400 (SGT).

• CPI y/y (Forecast: 0.9%, Previous: 1.5%)
  
• Core CPI y/y (Forecast: 1.4%, Previous: 1.6%)
  

Bank of England Governor Bailey will be testifying on the economic impact of COVID-19 before the Treasury Select Committee later at 2130 (SGT). During this time, there may be volatility in GBP.

Currently, GBP/USD is testing the resistance level of 1.22400 and the next support level is at 1.20800.
If the released CPI data is worse than forecasted, look for short-term selling opportunities of GBP/USD after it rejects the resistance level of 1.22400 up until Governor Bailey’s testification.