GBP/USD Daily Forecast – British Pound Tries To Gain More Ground Ahead Of Powell’s Speech

GBP/USD Video 27.08.20.

U.S. Dollar Remains Under Pressure As Traders Expect Dovish Commentary From Fed Chair Jerome Powell

GBP/USD is trying to settle above 1.3200 as the U.S. dollar remains under pressure ahead of Fed Chair Jerome Powell’s speech at Jackson Hole Symposium.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has declined below the 93 level after an unsuccessful attempt to settle above the 20 EMA near 93.40.

Powell’s commentary will be the main driver for the American currency in the upcoming trading sessions. Currently, the markets expect that Powell will hint that Fed is ready to tolerate higher inflation and pledge that interest rates will stay low for a long time.

In case Powell is not as dovish as expected, the U.S. dollar may get a significant boost which would be bearish for GBP/USD. If he clearly articulates that the Fed wants to push inflation above 2% while keeping rates low, the U.S. Dollar Index will test the recent lows at 92.50 while GBP/USD will move to yearly highs.

In addition to Powell’s speech, traders will digest the new data on U.S. Initial Jobless Claims and Continuing Jobless Claims. Initial Jobless Claims are expected to decline to 1 million while Continuing Jobless Claims are projected to fall to 14.45 million.

Technical Analysis

GBP/USD gained upside momentum and is trying to settle above 1.3200. In case this attempt is successful, GBP/USD will head towards the recent highs near 1.3270.

A successful test of the resistance at 1.3270 will open the way to the next material resistance level at 1.3425, although GBP/USD will likely face some resistance at lower levels.

Back in December 2019, GBP/USD managed to gain significant upside momentum once it was able to get above 1.3300, and the history may repeat itself since there are no material resistance levels in the nearby.

On the support side, the nearest support for GBP/USD is located at 1.3110. The 20 EMA is located close to 1.3110, and this support level is set to be strong.

A move below the 20 EMA will signal that the current upside momentum has come to an end so GBP/USD will likely gain downside momentum and head towards August lows at 1.2980.

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