GBP/USD Daily Forecast – Another Attempt To Settle Above Resistance At 1.3110

GBP/USD Video 25.08.20.

British Pound Continues Its Attempts To Rebound After Recent Sell-Off

GBP/USD continues to trade near 1.3100 as the U.S. dollar is losing some ground against a broad basket of currencies amid confirmation of the Phase 1 trade deal between U.S. and China.

The U.S. Dollar Index has managed to settle above 93 but failed to breach the resistance at the 20 EMA at 93.45. The U.S. Dollar Index has already made several attemtps to get above the 20 EMA level but did not manage to gain sufficient upside momentum. In case the U.S. Dollar Index finally moves above the 20 EMA, GBP/USD will likely find itself under significant pressure.

U.S. and China trade officials have reaffirmed both countries’ commitment to the Phase 1 trade deal between the world’s biggest economies, providing additional support to the markets.

The U.S. – China relations have significantly worsened in recent months so the markets were pleased to hear that the trade deal remained intact.

Not surprisingly, the news provided some support to riskier assets like the British pound. At the same time, the Phase 1 trade deal is beneficial to the U.S. economy so the news will not put much pressure on the American currency.

Today, the U.S. will provide New Home Sales report for July. New Home Sales are projected to grow by 1.3% month-over-month as consumers are expected to increase their spending on housing in search for better options during the pandemic.

Technical Analysis

GBP/USD continues its attempts to settle above the nearest resistance level at 1.3110. In case GBP/USD manages to get above this level, it will head towards the recent highs near 1.3270.

There are no material levels between 1.3110 and 1.3270 so such a move may be fast.

On the support side, GBP/USD continues to receive support at the 20 EMA at 1.3065. This is a very important level for GBP/USD as a move below the 20 EMA will signal that the current upside momentum has come to and end.

In this scenario, GBP/USD will likely gain significant downside momentum and head towards August lows at 1.2980.

For a look at all of today’s economic events, check out our economic calendar.