GBP/USD Daily Forecast – British Pound Is Back To Recent Highs
GBP/USD Video 21.08.20.
Disappointing U.S Initial Jobless Claims Report Puts Pressure On The U.S. Dollar
GBP/USD managed to get back above 1.3200 as the U.S. Dollar Index declined towards 92.50 amid broad U.S. dollar weakness.
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Yesterday, U.S. dollar tried to continue the upside momentum that it gained after the release of FOMC Minutes, but weak U.S. employment data stopped its upside move.
U.S. Initial Jobless Claims report showed that 1.1 million Americans filed for unemployment benefits in a week compared to analyst consensus of 925,000.
This report put significant pressure on the U.S. dollar as it highlighted the fragility of the job market recovery.
UK has just released Retail Sales data for July. On a month-over-month basis, Retail Sales grew by 3.6% compared to analyst consensus which called for growth of 2%. On a year-over-year basis, Retail Sales increased by 1.4%.
Later today, UK will release Flash Manufacturing PMI and Flash Services PMI data for August which may have a significant impact on GBP/USD trading dynamics.
Manufacturing PMI is expected to grow from 53.3 in July to 53.8 in August while Services PMI is projected to increase from 56.5 to 57. Better-than-expected PMI data may provide additional support to GBP/USD.
Technical Analysis
GBP/USD managed to quickly rebound after the sell-off and looks ready to test the recent highs.
The nearest resistance level for GBP/USD is located at the recent highs near 1.3270. In addition, some resistance may be expected closer to 1.3300.
In case GBP/USD manages to settle above 1.3300, it will likely gain additional upside momentum as there are no resistance levels in the nearby. In this scenario, GBP/USD will head towards the next resistance level at 1.3425.
On the support side, the recent fast moves have put the existence of support at 1.3200 under question. GBP/USD continues to recieve support at 1.3110 while the 20 EMA at 1.3080 serves as the major support level.
A move below the 20 EMA will signal that the current upside momentum has come to an end so traders should expect increased interest in GBP/USD once it gets to this level.
From a big picture point of view, GBP/USD has once again confirmed that its upside trend remains intact as every notable pullback is quickly bought.
For a look at all of today’s economic events, check out our economic calendar.