GBP/USD Daily Forecast – British Pound Continues Its Major Upside Move

GBP/USD Video 31.07.20.

U.S. Dollar Remains Under Serious Pressure

GBP/USD rallied above 1.3100 as the U.S. dollar continued to lose ground against a broad basket of currencies on fears about the speed of U.S. economic recovery.

The U.S. Dollar Index continued its slide and managed to get below the 93 level.

The continued spread of coronavirus in the U.S., challenging negotiations about the next coronavirus aid package and recent Trump’s tweet suggesting a possible delay in U.S. elections were the key catalysts for the downside move.

After his tweet, U.S. President Donald Trump stated that he did not want to postpone the election but was worried about problems with mail-in ballots.

However, the damage to the U.S. dollar was already done as traders started to think about potential problems with the upcoming U.S. presidential election.

Meanwhile, Republicans and Democrats continue to negotiate the new coronavirus aid package. It’s the last day of month, and the federal jobless benefit is set to expire.

Failure to maintain the program will lead to an additional blow to the U.S. economy as consumer spending will quickly decline, putting pressure on businesses and causing job losses.

Yesterday’s employment reports showed that the job market has started to succumb to pressure from the spread of coronavirus. U.S. Initial Jobless Claims increased to 1.43 million while Continuing Jobless Claims jumped to 17 million.

Technical Analysis

GBP/USD continues to rally and is trying to settle above 1.3100. The nearest resistance for GBP/USD is located at 1.3200.

RSI is at extremely overbought levels but broad weakness of the U.S. dollar continues to push GBP/USD higher. That said, the risks of a pullback increase day by day.

On the support side, the nearest support level for GBP/USD is located at 1.3070. In case GBP/USD moves below this support level, it will head towards the next support at 1.3020.

Currently, the U.S. dollar sell-off looks like a true panic so the market may easily ignore the fact that U.S. dollar is seriously oversold. At this point, GBP/USD maintains good chances to test the nearest resistance at 1.3200.

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