GBP/USD Daily Forecast – British Pound Gains Ground As Traders Focus On Recovery
GBP/USD Video 06.07.20.
Recovery Hopes Provide Support To Riskier Assets
GBP/USD continues to trade near 1.2500 as the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index declined below the 97 level as global markets ignored the continued increase in the number of new coronavirus cases and focused on the economic recovery.
Today, traders will digest final Services PMI and Composite PMI reports from the U.S.. Services PMI is expected to increase from 37.5 in May to 46.7 in June while Composite PMI is projected to grow from 37 to 46.8.
Any positive suprise on the PMI front will likely provide additional support to riskier assets and could put more pressure on the U.S. dollar.
The UK will release Construction PMI and New Car Sales data for June. Construction PMI is forecast to jump from 28.9 in May to 47 in June as the British economy reopened after the serious lockdown. New Car Sales are expected to stay weak as consumers need time to return to their normal lives and plan big purchases.
All recent economic data pointed to a fast economic recovery so global markets were bullish on riskier assets. However, it remains to be seen whether economic numbers will point to a continued fast recovery in the future as the big size of the initial rebound is due to the effect of a low base.
GBP/USD managed to get out of the local downside channel and continues its attempts to gain more upside momentum.
The nearest resistance level is located at the recent highs near 1.2530. In case GBP/USD manages to settle above this level, it will head towards the high end of the current trading range at 1.2650.
On the support side, the first material support level is located at the 50 EMA near 1.2450. A move below the 50 EMA will mark a return to the local downside trend. In this scenario, GBP/USD will head towards the next support level at 1.2350.
While GBP/USD experienced significant volatility in recent months, it continues to stay in the trading range between 1.2250 and 1.2650 and will need significant catalysts to get out of this range and start a new trend.
For a look at all of today’s economic events, check out our economic calendar.