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GBP/USD Daily Forecast – Support At 1.3010 Stays Strong

By:
Vladimir Zernov
Published: Aug 12, 2020, 07:05 UTC

GBP/USD failed to settle below the support at 1.3010 despite U.S. dollar's attempts to gain more ground.

GBP/USD Daily Forecast – Support At 1.3010 Stays Strong

In this article:

GBP/USD Video 12.08.20.

U.S. Dollar Tries To Gain More Ground But British Pound Stays Strong

GBP/USD continues to trade above the nearest support level at 1.3010 while the U.S. dollar tries to gain more ground against a broad basket of currencies.

The U.S. Dollar Index has managed to settle above 93.50 as rising U.S. bond yields increased investor appetite for the American currency. The nearest resistance level for the U.S. Dollar Index is located at the 20 EMA at 94.10.

In case the U.S. Dollar Index manages to settle above this resistance level, the U.S. dollar will gain more upside momentum which would be bearish for GBP/USD.

Interestingly, U.S. Dollar Index continues to rebound despite the fact that Republicans and Democrats failed to reach consensus on the new coronavirus aid package. At this point, there are no signs of major progress on this front.

The UK has just released GDP Growth Rate for the second quarter. On a quarter-over-quarter basis, GDP declined by 20.4% compared to analyst consensus which called for a decline of 20.5%. On a year-over-year basis, GDP declined by 21.7%.

GDP data was a bit better than expected but still highlighted a huge blow to the British economy.

Industrial Production increased by 9.3% month-over-month in June, mostly in line with analyst expectations. Manufacturing Production grew by 11.0% month-over-month in June as the economy started to rebound once strict lockdown measures were lifted.

Technical Analysis

gbp usd august 12 2020

GBP/USD did not manage to settle below the nearest support at 1.3010 and remains in the range between 1.3010 and 1.3110.

In case GBP/USD settles below the support at 1.3110, it will head towards the next support level at the recent lows at 1.2980. The 20 EMA is in the nearby, so this support level is set to be strong.

A move below the 20 EMA will show that GBP/USD has lost its upside momentum, and a sell-off may follow.

On the upside, GBP/USD will have to settle above the resistance level at 1.3110 to continue its upside move. RSI is in the moderate territory so there is plenty of room to gain momentum.

In case GBP/USD manages to get above 1.3110, it will head towards the next resistance level near recent highs at 1.3200.

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

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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