GBP/USD Daily Forecast – Consolidation Near 1.3100

GBP/USD Video 05.08.20.

All Eyes On U.S. Employment Reports And Commentary From Bank of England

GBP/USD continues to trade near 1.3100 as traders prepare to digest a number of U.S. employment reports which will likely have a material impact on the currency markets.

Today, the market will digest the U.S. ADP Employment Change report which is currently projected to show that 1.5 million jobs were created in the private sector in July.

In addition to ADP Employment Change report, traders will also take a look at Services PMI data for U.S. and UK. U.S. Services PMI is expected to increase from 47.9 in June to 49.6 in July, while UK Services PMI is projected to grow from 47.1 to 56.6. Numbers above 50 show expansion.

On Thursday, the Bank of England will announce its interest rate decision. The Bank of England is expected to maintain the rate at 0.1% and keep the quantitative easing program at 745 billion pounds, so traders will be focused on the Bank’s commentary.

It is not surprising to see GBP/USD stabilizing near 1.3100 after a period of volatility as traders wait for more catalysts.

Meanwhile, the U.S. Dollar Index  has settled below 93.5 and continues to decline as uncertainty over the new coronavirus aid package and fears that U.S. employment reports may indicate a worsening situation in the job market put pressure on the American currency.

Technical Analysis

GBP/USD has made several attempts to settle above the nearest resistance level at 1.3110 but did not manage to gain sufficient upside momentum.

RSI has left the extremely overbought territory so GBP/USD has some room for upside in case the right catalysts emerge.

In case GBP/USD gets above 1.3110, it will likely gain additional upside momentum and head towards the next resistance level at 1.3200.

On the support side, the previous support levels at 1.3070 and 1.3020 have been crossed many times, so the nearest significant support level is located at the recent low at 1.2980.

If GBP/USD manages to settle below this support level, it will gain downside momentum and head towards the next support at the 20 EMA at 1.2880.

Currently, GBP/USD stays in an upside channel and maintains good chances to continue its upside move but near-term price action will depend on the above-mentioned employment reports and commentary from the Bank of England.

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