GBP/USD Forecast: Boris may bring it down after failing to fly with the Fed

• GBP/USD has been unable to take advantage of the dollar's weakness.
• PM Johnson may provide more details on extending the lockdown.
• Thursday's four-hour chart is painting a mixed picture. 

Cable cannot climb – the pound has failed to take advantage of dollar weakness – stemming from various factors – and could be ready to fall. 

The UK is set to extend its lockdown which currently runs through May 7. Foreign Secretary Dominic Raab – who was in charge for a few weeks – hinted that the shuttering will continue amid fears of a second wave. He cited Germany's rise in the infection rate which may force that country to reimpose restrictions. 

The mood is gloomy after the government succumbed to pressure and included COVID-19 deaths outside hospitals in its official count, bringing the total to above 26,000. The ball is now in Prime Minister Boris Johnson's court.

The PM returned to Downing Street on Monday after recovering from the disease but was off on Wednesday to attend the birth of his new baby boy. He will now lead the daily coronavirus briefing and may shed more light on the next moves. Criticism about the government's late response to the crisis, its mismanagement of medical equipment – and Johnson's near-death experience – may cause him to err on the side of caution.

Dollar weakness

GBP/USD edged up on Wednesday but was unable to benefit from the greenback giving ground. The Federal Reserve left its policies unchanged yet made an unequivocal pledge to do whatever is necessary, weighing on the safe-haven dollar.

The Fed said it would leave rates at the bottom until the economy returns back to the track and would also buy bonds "at the amount needed." Jerome Powell, Chairman of the Federal Reserve, said he is ready to more and called the government to expand its fiscal stimulus.

See: 

• Fed Analysis:  Sober crisis management
• Fed Analysis: Supporting stocks and downing the dollar, as long as necessary

The bank's decision came in the wake of devastating growth figures. Gross Domestic Product plunged by 4.8% annualized, worse than expected – and things will certainly get worse in the second quarter. Weekly jobless claims are due out on Thursday, and while they may fall for the fourth consecutive week, the total number of job losses may exceed 30 million since mid-March. 

See US Initial Jobless Claims Preview: When is less more?

The market mood was generally upbeat and the greenback under pressure also beforehand, amid promising results for a drug that with curing COVID-19. Gilead's Remdesivir lowered the mortality rate and aided the recovery of sick patients. White House officials expressed optimism, yet the full study is yet to be published. Th White House is also working to accelerate the production of vaccines, once one is found.

US President Donald Trump harshly criticized China and blamed it for doing anything to jeopardize his reelection chances and not implementing the trade deal. His words somewhat dampened the mood and helped the dollar recover. However, GBP/USD remains locked.

Overall, news related to the lockdown, US data, and digesting the Fed decision will all play a role in shaping cable trading.

GBP/USD Technical Analysis

Pound/dollar is trading at the as broad uptrend but has recently set lower highs and lower lows, an initial bearish sign. It continues trading above the 50, 100, and 200 Simple Moving Averages on the four-hour chart, and momentum is to the upside. All in all, bulls are in the lead but losing some strength. 

Some support awaits at .2450, which was a stepping stone on the way up. It is followed by 1.2390, Wednesday's low, and then by 1.2360, which capped it last week. NExt, 1.23, and 1.2250 await the pair.

Looking up, the weekly high of 1.2525 is significant resistance after holding GBP/USD down this week and also beforehand. It is followed by 1.2575, which was a swing high in mid-April, and by 1.2645, the monthly high.

More: Market drivers in times of disease, and why bulls should have fear of the dark – Interview with Mário Blaščák