GBP/USD Daily Forecast – Test Of Resistance At 1.2750

GBP/USD Video 23.07.20.

British Pound Continues Its Attempts To Move Higher

GBP/USD is testing the nearest resistance level at 1.2750 as the U.S. dollar continues to lose ground against a broad basket of currencies.

The U.S. Dollar Index has settled below the 95 level and tries to get below March lows at 94.65. If this happens, GBP/USD will head to new highs.

It looks like the increase in U.S. – China tensions is playing against the dollar as safe haven buying has shifted to precious metals. The U.S. provided China with just 72 hours to close its consulate in Houston, and U.S – China relations hit a new low.

China has already promised to retaliate and is likely to make its move soon. According to reports, China may close the U.S. consulate in Wuhan.

At this point, the markets are not too worried about the recent escalation as they believe that the Phase 1 trade deal with China will not get hurt before the U.S. election in November.

Today, markets will digest the new U.S. Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims are expected to stay flat at 1.3 million while Continuing Jobless Claims are projected to drop to 17.1 million.

Technical Analysis

GBP/USD has settled near the resistance level at 1.2750 and continues its attempts to gain more upside momentum. Back in June, GBP/USD managed to get above 1.2750 but quickly reversed course and headed to the major support level at 1.2250.

Despite the strength of the recent upside move, the same risk is still present. GBP/USD should settle above 1.2750 in order to have a realistic chance to get above the next resistance at 1.2815 and continue the current upside move.

If this happens, GBP/USD will be able to establish a solid upside trend and may ultimately get above 1.3000.

On the support side, the previous major resistance level at 1.2650 is the nearest support level for GBP/USD. A move below this level will signal that the upside momentum has come to an end.

In this case, GBP/USD will head towards the next support level at the 20 EMA at 1.2600.

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