05.04.202014:46 Forex Analysis & Reviews: GBP/USD. Preview of the week. Morgan Stanley analysts predict the collapse of the US economy. +100,000 infected over the past day

The British pound, which seems to have resumed its downward trend at the end of last week, is unlikely to be dependent on macroeconomic statistics next week. Throughout the week, three more or less significant reports will be published in the UK. However, given the fact that market participants continue to ignore statistics, it is likely that traders will continue to trade in accordance with technical factors. We have already described all possible options for the pair's movement in the near future. However, do not forget that in addition to technical factors, there are so-called non-speculative transactions on the currency market. There are a huge number of agents on the market who carry out transactions to buy and sell any currency not for profit, but for current needs, to maintain operating activities, to hedge future risks, and to form portfolios designed to preserve the value of assets. Thus, many large market participants can continue to trade within their strategies, which strongly affects the movement of all pairs, including the pound/dollar.

Well, the coronavirus is still the main cause of panic in the currency and global markets. As of the morning of April 5, about 1.2 million diseases were registered worldwide. In the United States - 312,000 cases, in the UK - 42.5 thousand cases. Thus, the epidemic continues to spread and it is not yet possible to stop it. Despite the fact that we have concluded that the participants of the foreign exchange market will calm down, if the situation with the pandemic does not improve, we may well witness a second wave of panic. After all, a pandemic, as we have said many times, is not just a sore that you can get over and forget about it. For the world economy, this is the source of a new crisis, recession, and perhaps even depression for many years to come. In addition, this is also a loss of life. In Britain, 708 people have died in the past day... The situation in the United States is also frightening. We have already informed readers of the forecasts of Donald Trump and some other members of Congress, who believe that the COVID-19 virus can kill up to 200,000 Americans. The numbers really look terrible. Meanwhile, things are very bad in New York state. The epidemic hit this state and the city of New York the most. US President Donald Trump has decided to send 1,000 military personnel to help in the fight against the coronavirus. 10,000 ventilators are also being sent to the state.

No macroeconomic reports will be published in Britain on Monday, Tuesday and Wednesday. Traders will witness more or less significant data only on Thursday. On this day, data on GDP in February will be available, as well as a preliminary estimate of the GDP growth rate for March. We believe that this data will not interest the majority of market participants at all. The report on industrial production in the UK will also not cause any interest, as it will relate to February. No data will be received from Great Britain on Friday. Thus, the macroeconomic background will be extremely weak for the pound/dollar this week. The only really important report will be the data on applications for unemployment benefits in the US. However, in the past times, traders also did not react too zealously to it, despite the unprecedented growth in the value of this indicator.

Meanwhile, global rating agencies, banks, and conglomerates continue to calculate possible losses for the US (and global) economy in 2020. For example, analysts at Morgan Stanley believe that the US economy will shrink by 3.4% in the first quarter of 2020. The world's largest economy will collapse by 38% in the second quarter. The unemployment rate will be 15.7% in the second quarter. It should be noted that the forecasts of the US Congress are much more optimistic. For example, GDP may decline by only 7-8% in the second quarter. Other sources say that the US economy is already in the largest recession in the last 80 years. If you look at the latest reports on NonFarm Payrolls and applications for unemployment benefits and compare them with similar data for 2008 (the time of the mortgage crisis), it immediately becomes clear that the current crisis and the fall in the economy will be much stronger. World experts agree that if the pandemic persists for a month or two, all the measures taken by the US government will not have a beneficial effect and will not stop the economic downturn. Moreover, they are not enough to keep companies from continuing mass layoffs, not enough to support ordinary Americans and those who lost their jobs. It is quite possible that they will not be enough to support all companies that are on the verge of bankruptcy (first of all, we are talking about airlines). Thus, the Trump administration nearly has no choice. The longer the crisis will last, the greater must be the new stimulus injections into the economy of the United States. Most likely, the trillion-dollar package of measures that was adopted relatively recently will clearly not be the last.

Recommendations for the pair GBP/USD:

The pound/dollar is now trying to resume the downward trend. Therefore, we recommend considering trading on the downside at the beginning of the new week. According to the Ichimoku indicator, the system speaks of the permissibility of sell positions with a target level of volatility of 1.2099 on Monday. Buying the British pound is not recommended until the price consolidates above the Kijun-sen line.