GBP/USD Daily Forecast – Support At 1.2350 Stays Strong

GBP/USD Video 29.06.20.

Traders Are Focused On Virus News But Riskier Currencies Still Get Some Support

GBP/USD is rebounding from the support at 1.2350 after an unsuccessful attempt to settle below this level.

The U.S. dollar is supported by fears of the second wave of coronavirus but this support is offset by recovery hopes. As a result, the U.S. Dollar Index has repeatedly failed to settle above the key resistance level at 97.5.

According to data from Johns Hopkins University, the world has already registered more than 10 million coronavirus cases. On Sunday, the World Health Organization has recorded the maximum amount of new daily cases.

Some U.S. states have decided to close bars in an attempt to contain the spread of the disease. At this point, this move did not have a major impact on market sentiment since bars are not a big part of the economy and the economic activity continues to rebound elsewhere.

Today, the U.S. will report Pending Home Sales for May. Analysts expect that the number of Pending Home Sales has increased by 19.9% on a month-over-month basis.

Technical Analysis

GBP/USD has tested the support at 1.2350 and even managed to get below this level. However, the U.S. dollar failed to develop additional upside momentum, and GBP/USD has settled above this support level.

Nevertheless, GBP/USD continues to trend down in a local downside channel, and another test of the support at 1.2350 may be coming soon. If this test is successful, GBP/USD will head towards the low end of the current trading range at 1.2250.

I’d note that the 20 EMA is crossing the 50 EMA to the downside, indicating that the downside momentum continues to develop.

On the upside, GBP/USD will have to get above the 20 EMA and the 50 EMA near 1.2450 to break the local downside trend and have a chance to develop more upside momentum.

If this happens, GBP/USD will head towards the highs of the recent rebound near 1.2530. In case GBP/USD gets above this level, the road to the high end of the current trading range at 1.2650 will be open.

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