GBP/USD Daily Forecast – British Pound Continues Its Attempts To Move Higher

GBP/USD Video 24.06.20.

British Pound Stays Strong Amid Increased Demand For Riskier Currencies

GBP/USD is trying to settle above the 20 EMA at 1.2500 as demand for riskier currencies stays strong after better-than-expected Flash PMI data across the developed world.

UK has reported that Manufacturing PMI has increased from 40.7 in May to 50.1 in June while Services PMI increased from 29 to 47. Numbers below 50 show contraction, so the services segment remained under pressure while the manufacturing segment managed to get into the positive zone.

In the U.S., Manufacturing PMI grew from 39.8 in May to 49.6 in June while Services PMI increased from 37.5 to 46.7. Judging by the recent weakness of the U.S. dollar, the market widely anticipates that PMI numbers will get above 50 in July.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled near 96.5. Just a few days ago, the U.S. Dollar Index was testing resistance at 97.5, so the U.S. dollar suffered a material sell-off due to increase in risk appetite.

Interestingly, global markets continue to ignore developments on the coronavirus front. The pandemic is raging in Latin America where death toll has surpassed 100,000.

In the U.S., many states have recorded an increase in the number of new cases, and the Washington state has decided to make face masks mandatory to slow the spread of the disease.

In my opinion, the market will continue to ignore the development of the pandemic until it sees that it negatively impacts consumer behavior.

Technical Analysis

GBP/USD is trying to settle above the resistance area between the 50 EMA at 1.2460 and the 20 EMA at 1.2500. In case this attempt is successful, GBP/USD could head towards the high end of the current trading range at 1.2650.

GBP/USD will have to move below both the 20 EMA and the 50 EMA to develop downside momentum. In this scenario, GBP/USD will move towards the test of the recent lows at 1.2350.

Currently, GBP/USD remains range-bound between the support at 1.2250 and the resistance at 1.2650. Volatility inside this range is huge so traders should be prepared to act quickly when the short-term trend changes.

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