GBP/USD Daily Forecast – British Pound Pulls Back After Major Upside Move

GBP/USD Video 30.07.20.

U.S. GDP Growth Rate In Focus

GBP/USD faced resistance at 1.3020 and declined below 1.3000 as the U.S. dollar started to rebound against a broad basket of currencies.

The U.S. Dollar Index fell as low as 93.18 immediately after yesterday’s Fed Interest Rate Decision but then managed to get more support and is currently trying to settle above 93.5.

The Fed acknowledged that the speed of economic recovery depended on the progress on the coronavirus front and also stated that the recent surge in the number of new cases was hurting economic prospects.

The Fed also promised to support the economy as long as necessary but did not announce any new measures. Most likely, any new decisions will be made in the fall.

Today, the U.S. will release the second quarter GDP Growth Rate report. Analysts expect that GDP has contracted by 34.1% quarter-over-quarter as coronavirus-related restrictions dealt a heavy blow to the economy.

Meanwhile, the Initial Jobless Claims report is projected to show that 1.45 million Americans filed for unemployment benefits in a week, compared to 1.42 million in the previous week. Continuing Jobless Claims are expected to stay flat at 16.2 million.

Any negative surprise on the employment front could put pressure on riskier assets. At the same time, it remains to be seen whether the U.S. dollar will be able to benefit from safe haven buying as demand for safe haven assets has shifted to precious metals.

Technical Analysis

GBP/USD is pulling back after the major upside move. The nearest support for GBP/USD is located at 1.2900.

In case GBP/USD declines below this support level, it will head towards the next support level which is located at the high of the previous upside move at 1.2815.

On the upside, GBP/USD faced resistance at 1.3020. If GBP/USD manages to settle above this level, it will head to the next resistance level at 1.3070.

The current pullback is not suprising since RSI was in the overbought territory. At this point, the upside trend in GBP/USD remains intact, and the U.S. dollar will likely need strong positive catalysts to break the current trend.

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