GBP/USD Daily Forecast – Support At 1.3110 Stays Strong

GBP/USD Video 07.08.20.

U.S. Dollar Continues Its Attempts To Rebound Amid Worsening U.S. – China Relations

GBP/USD lost some upside momentum as the U.S. dollar continued to rebound against a broad basket of currencies amid increasing U.S. – China tensions.

U.S. President Donald Trump has announced that U.S. will ban U.S. transactions with China’s ByteDance and Tencent which operate TikTok and WeChat.

Trump’s executive orders will be effective in 45 days, providing Microsoft with time to negotiate the purchase of TikTok’s U.S. operations.

This move marks a new low in U.S. – China relations at a time when the world economy tries to recover from the huge blow dealt by the coronavirus pandemic.

The increase in U.S. – China tensions has played in the U.S. dollar’s favor, and the U.S. Dollar Index is currently trying to settle above the 93 level.

In addition to the news on U.S. – China front, traders will be focused on the upcoming U.S. employment reports.

Non Farm Payrolls report is projected to show that 1.58 million jobs were added in July, while Unemployment Rate is expected to decline from 11.1% in June to 10.5% in July.

Yesterday, U.S. Initial Jobless Claims and Continuing Jobless Claims reports came better than expected, but it looks like the market is still worried about the damage done by the recent surge in the number of coronavirus cases in the U.S.

Technical Analysis

GBP/USD did not manage to settle above the resistance at 1.3200 but stays above the nearest support level at 1.3110.

RSI is in the overbought territory so GBP/USD will need significant catalysts to maintain its near-term upside momentum.

A move above the resistance level at 1.3200 will open the way to the test of the next resistance at 1.3290.

On the support side, a move below the nearest support level at 1.3110 may trigger a sell-off since GBP/USD made a major upside move without any pullback while RSI remains in the overbought territory.

Such a sell-off may push GBP/USD closer to the next support level at the recent lows at 1.2980.

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