GBP/USD Analysis: Recent strong positive move stalls ahead of 1.2500 psychological mark

• GBP/USD rallied to two-week tops on Friday amid persistent selling bias around the USD.
• Concerns over the coronavirus crisis extended some support to the USD’s safe-haven status.

The GBP/USD pair continued scaling higher for the fourth consecutive session on Friday and rallied to the vicinity of the key 1.2500 psychological mark, or two-week tops. Following an early modest uptick, the US dollar came under some renewed selling pressure and was seen as one of the key factors that assisted the pair to build on its recent strong recovery move from 35-year lows set on March 20. The greenback continued to be weighed down by the Fed's unlimited QE and was further pressurized by the disappointing release of the US Michigan Consumer Sentiment Index, which fell to 89.1 in March from 101 previous and marked its second-largest monthly decline.

This coupled with concerns over the economic fallout from the coronavirus pandemic, a massive $2.2 trillion US economic stimulus package, further prompted investors to continue dumping the buck. The fact that the United States has the highest number of new coronavirus cases in the world, investors now seemed increasingly worried about its impact on the economy and now expect the Fed to add to its recent stimulus measures. With the USD price dynamics turning out to be an exclusive driver of the pair's strong positive move, worries over the rapid spread of the virus in the UK did little to hinder the intraday upsurge of around 350 pips.

Meanwhile, a prolonged period of uncertainty, amid tightening coronavirus lockdowns across the worlds, extended some support to the greenback's perceived safe-haven status. This eventually exerted some pressure on the major during the Asian session on Monday, albeit lacked any strong follow-through and remained limited, at least for the time being. In the absence of any major market-moving economic releases, either from the UK or the US, development surrounding the coronavirus saga might continue to play a key role in influencing the pair's momentum on the first day of a new trading week.

Short-term technical outlook

From a technical perspective, the pair stalled its recent strong bullish momentum just ahead of the 1.2500 round-figure mark. The mentioned handle coincides with the 61.8% Fibonacci level of the 1.3200-1.1412 steep fall and should now act as a key pivotal point for short-term traders.

A convincing break through might prompt a fresh wave of the short-covering move and pave the way for a further near-term appreciating move. The pair then might accelerate the momentum further towards the 1.2600 round-figure mark ahead of the 1.2625 supply zone. The momentum could further get extended towards the 1.2700 mark en-route the 1.2740 strong horizontal support break-point, now turned resistance.

On the flip side, 50% Fibo. level, around the 1.2310 region now seems to protect the immediate downside, below which the pair might slide back towards testing the 1.2200 round-figure mark. Any subsequent slide might still be seen as a buying opportunity and help limit the downside near 38.2% Fibo. level, around the 1.2100 round-figure mark.