GBP/USD Daily Forecast – British Pound Continues Its Upside Move
GBP/USD Video 08.07.20.
Virus Data Again In Spotlight
GBP/USD managed to get above the resistance at 1.2530 and continues its upside trend as the world markets are anxious about the surge in coronavirus numbers while Britain continues Brexit talks with EU.
The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled below 97 but tries to get back to the 97 – 97.5 range.
The U.S. has reached the 3 million mark in the number of registered coronavirus cases, and the virus data is once again in spotlight.
The Fed is worried that the increasing number of coronavirus cases in the U.S. will lead to consumer anxiety and hurt the ongoing recovery.
It remains to be seen how the markets will interpret the Fed’s worries. On the one hand, the worsening situation on the coronavirus front should be bullish for safe haven assets like the U.S. dollar.
On the other hand, problems with recovery in the U.S. almost guarantee more stimulus from the Fed whose money-printing is bearish for the U.S. dollar.
For the pound, Brexit talks remain one of the biggest drivers. At this stage, the negotiating positions of EU and Britain are rather far away from each other, and traders can expect that negotiations will drag on until the deadline at the end of the year.
GBP/USD has gained additional upside momentum and breached the resistance at 1.2530. At this point, the nearest significant resistance for GBP/USD is located at the high end of the current trading range at 1.2650.
At the end of June, GBP/USD tested the low end of the current trading range at 1.2250 but quickly rebounded. I’d expect that the resistance at 1.2650 will be strong and that GBP/USD will need significant catalysts to get out of the current range and start a new upside trend.
On the support side, the nearest support level for GBP/USD is located at the previous resistance level at 1.2530. In case GBP/USD declines below this level, it will head towards the next support at the 50 EMA at 1.2450.
For a look at all of today’s economic events, check out our economic calendar.