GBP/USD Daily Forecast – Resistance At 20 EMA Stays Strong

GBP/USD Video 23.06.20.

Trade Deal With China Comes Into Spotlight

GBP/USD met resistance near the 20 EMA at 1.2490 after it rebounded from the support level at 1.2350. Trading was especially volatile after White House trade adviser Peter Navarro stated that the trade deal with China was over but later corrected his comments and insisted that the deal was still in place.

After the initial turmoil in the markets, the U.S. President Donald Trump tweeted that the deal was fully intact. Initially, Navarro’s comments provided support to the U.S. dollar as traders rushed to buy safe haven assets.

However, the American currency has pulled back after Trump’s comments, and the U.S. Dollar Index has settled near the 97 level.

Yesterday, the U.S. has reported Existing Home Sales which have declined by 9.7% month-over-month in May. Today, traders will digest the New Home Sales report which is expected to show that New Home Sales have increased by 3.5% in May.

In addition,  the market will have a chance to evaluate Flash PMI data for both the U.S. and the UK.

In the UK, Manufacturing PMI is expected to increase from 40.7 to 45 while Services PMI is projected to rise from 29 to 40.

In the U.S., Manufacturing PMI is set to rise from 39.8 to 48 while Services PMI is projected to increase from 37.5 to 46.5.

The UK economy was hit especially hard by virus containment measures so its PMI numbers are expected to be lower. Both economies are still in a challenging situation as PMI numbers below 50 show contraction.

Technical Analysis

GBP/USD faced material resistance near the 20 EMA at 1.2490 and fell towards the 50 EMA at 1.2460. Currently the area between the 50 EMA and the 20 EMA serves as one major resistance area for GBP/USD.

In case GBP/USD manages to get above this resistance area, it will head towards the high end of the current trading range at 1.2650.

On the support side, a move below the 50 EMA will open the way to another test of the support level at 1.2350. In case GBP/USD gets below 1.2350, it will decline towards the low end of the current trading range at 1.2250.

From a big picture point of view, GBP/USD continues to trade in a wide range between 1.2250 and 1.2650.

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