GBP/USD Daily Forecast – Calm Ahead Of Bank Of England’s Interest Rate Decision

GBP/USD Video 18.06.20.

Traders Wait For The Release Of New U.S. Employment Data

GBP/USD stays near the 20 EMA at 1.2535 as the market awaits the interest rate decision from the Bank of England and new Initial Jobless Claims data from the U.S.

The Bank of England is expected to leave the rate unchanged since analysts believe that the Bank is not ready to take the rate into the negative territory. Instead of this harsh measure, the Bank of England is expected to increase its quantitative easing program from 645 billion pounds to 745 billion pounds.

In the U.S., Initial Jobless Claims report is projected to show that 1.3 million Americans filed for unemployment benefits in a week. The number of Initial Jobless Claims is trending down but stays at very high levels as the consequences of virus containment measures continue to put pressure on the economy.

Another important gauge of the employment situation, Continuing Jobless Claims report, is expected to show that 19.8 million Americans are recieving unemployment benefits.

As the number of Initial Jobless Claims continues to drop, data from Continuing Jobless Claims reports will become increasingly important since it shows the number of people who lost their jobs but were not able to find new employment opportunities.

The recent surge in coronavirus cases in some U.S. states and China’s Beijing could also be a driver for GBP/USD today. It remains to be seen whether the global markets will take the possibility of a second wave seriously. If they do, demand for safe haven assets will increase, providing support to the U.S. dollar.

Technical Analysis

GBP/USD is trying to hold above the nearest support level at the 20 EMA at 1.2535. If this attempt is successful, GBP/USD will head towards the test of the high end of the current trading range at 1.2650. A successful test of this resistance level will open the way to the test of the next resistance at 1.2750.

On the support side, a move below the support at 1.2535 will likely lead to increased downside momentum and take GBP/USD closer to the next support at the 50 EMA at 1.2470.

In case GBP/USD manages to settle below the 50 EMA, it will continue the downside move and head towards the next support level at 1.2350.

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