GBP/USD Daily Forecast – Stabilization After Sell-Off

GBP/USD Video 04.09.20.

British Pound Tries To Get More Support

GBP/USD remains under 1.3300 as the U.S. dollar is flat against a broad basket of currencies after yesterday’s attempts to gain more upside momentum.

U.S. Dollar Index tried to settle above the 20 EMA at 93 but this attempt was not successful. This is an important moment for the American currency. Most analysts remain skeptical about dollar’s ability to continue its rebound as the Fed is set to keep rates at the bottom for years which should put the American currency under significant pressure.

However, if U.S. Dollar Index manages to get above the 20 EMA, it will gain more upside momentum as dollar bears will rush to close their positions. This is a bearish scenario for GBP/USD.

Today, traders will focus on U.S. Non Farm Payrolls and Unemployment Rate reports. Traders expect Non Farm Payrolls of 1.4 million and Unemployment Rate of 9.8%. Better-than-expected employment reports may push the U.S. Dollar Index above the 20 EMA, putting pressure on GBP/USD.

In the UK, traders will digest the latest Construction PMI report. Construction PMI is expected to grow from 58.1 in July to 58.5 in August.

Technical Analysis

GBP/USD is trying to stabilize after the recent sell-off. The nearest support level for GBP/USD is located at 1.3270. Currently, GBP/USD is attempting to stay above this level.

In case this attempt is successful, GBP/USD will have a good chance to start a rebound. The recent moves of GBP/USD were very fast so no material levels were formed between the support at 1.3270 and the next resistance at 1.3425.

If GBP/USD manages to gain more upside momentum, and may quickly get back to the resistance at 1.3425. A move above this resistance level will open the way to the test of recent highs near 1.3485.

On the support side, a move below the nearest support at 1.3270 will push GBP/USD to the test of the 20 EMA level at 1.3215.

If GBP/USD manages to settle below the 20 EMA, it will gain more downside momentum and head towards the next significant support level at 1.3110.

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