GBP/USD Daily Forecast – Resistance At 1.3200 In Sight

GBP/USD Video 06.08.20.

Bank Of England Provides Additional Support To British Pound

GBP/USD has managed to settle above the resistance level at 1.3110 and continues its upside move as the U.S. dollar remains under pressure against a broad basket of currencies.

The U.S. Dollar Index continues its attempts to get below the nearest support level at 92.5. If these attempts are successful, U.S. dollar will likely gain additional downside momentum which would be bullish for GBP/USD.

Today, the Bank of England has announced its interest rate decision. The rate will stay unchanged at 0.1% while the size of the quantitative easing program will also remain intact at 745 billion pounds.

The Bank of England noted that housing market activity had returned to close to normal levels while spending activity had recovered significantly compared to the low levels that were reached back in April.

Importantly, the Bank of England concluded that the current stance of the monetary policy remained appropriate. These words will provide additional support to the British pound since they highlight that Bank of England is not ready to adopt negative interest rates.

Later today, the U.S. will release Initial Jobless Claims and Continuing Jobless Claims reports which may have a material impact on the dollar’s near-term trading dynamics.

Initial Jobless Claims are expected to stay mostly flat at 1.42 million while Continuing Jobless Claims are projected to drop from 17 million to 16.7 million.

Technical Analysis

GBP/USD has settled above the resistance at 1.3110 and is moving towards the next resistance level at 1.3200.

RSI is in the extremely overbought territory but GBP/USD maintains decent chances to continue the current upside move as the U.S. Dollar Index remains under significant pressure.

In case GBP/USD gets above 1.3200, it will gain additional upside momentum and head towards the next resistance level at 1.3290.

On the support side, the previous resistance level at 1.3110 will likely serve as the first support level for GBP/USD.

A move below this level will open the way to the test of the next material support level which is located at the recent lows at 1.2980.

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