GBP/USD Forecast: Upside unlocked? Boris' lockdown shrugged off to focus on Fed, stimulus, hopes

• GBP/USD has been recovering amid a better market mood and despite the UK's lockdown.
• Forward-looking PMIs on both sides of the Atlantic and coronavirus headlines are eyed.
• Tuesday's four-hour chart is painting an improved picture.

"You must stay at home" – decreed Prime Minister Boris Johnson in a televised address, announcing strict lockdown measures to curb the spread of coronavirus. The shuttering of most of the economy for at least three weeks had already been priced into the pound and had little impact.

The government's decision completes a full U-turn from the previous policy of "herd-immunity" – letting the disease spread among the stronger members of society while protecting the vulnerable ones. Covid-19 has already claimed that the lives of 336 people in the UK while over 6,700 have been confirmed as carrying the disease.

Britain joined its peers on the continent, where the illness is taking a heavy toll – yet with signs of hope. Italy reported the second consecutive day with fewer deaths, an initial ray of hope that its severe shutdown is beginning to bear fruit. 

The news from Italy is one of the reasons markets are rising and in turn, the dollar is falling. GBP/USD is moving higher also due to the Federal Reserve's massive Quantitative Easing program – an open-ended one. The Fed is buying almost everything and without limits. The move has been weighing on the dollar, but it may change course later. 

See Why the Fed´s unlimited money-printing scheme is dollar positive in coronavirus times – three reasons

The upbeat mood comes despite devastating Purchasing Managers' Indexes from the UK. Markit's preliminary figures for March have shown sharp contraction, especially in the services sector, where the score plummeted to 35.7 points – the lowest on record. The composite figure also hit the worst ever, below the trough of the financial crisis. 

PMI data is also due out in the US, and they are also set to collapse. ISM's figures carry more weight than Markit's in the US, the early publication will likely have an impact. 

See Markit US PMI Preview: How bad is bad?

Apart from these figures, traders will be watching deliberations on Capitol Hill between Democrats and Republicans. Both parties have reported optimism about striking a deal on a massive fiscal stimulus program – worth as much as $2.5 trillion – but there is no white smoke yet. President Donald Trump prefers limiting the lockdown in order to let the economy rise. 

Overall, health-related coronavirus headlines, fiscal stimulus news, and economic figures – which are finally catching up with events – will all move markets.

GBP/USD Technical Analysis

Momentum on the four-hour chart has turned to the upside – an upbeat development for the bulls. On the other hand, GBP/USD trades below the 50, 100, and 200 Simple Moving Averages. 

Immediate resistance awaits at 1.1715, a high point on Monday. It is followed by 1.18, a round level that also capped it last week. The next level to watch is Friday's high of 1.1940, followed by 1.20.

Support awaits at 1.1530, a low point on Friday, followed by 1.1450, which provided support on Monday and also last week. The 35-year low of 1.1414 is next. 

More Coronavirus market turmoil explained: Dollar, stocks, gold, oil, and more