GBP/USD Daily Forecast – U.S. Dollar Remains Under PressureGBP/USD breached the resistance level at 1.2350 and continues to gain upside momentum.
GBP/USD Video 01.06.20.
British Pound Gains Ground As Demand For Riskier Currencies Increases
GBP/USD continued its upside move as the U.S. dollar found itself under pressure against a broad basket of currencies amid increased demand for riskier assets.
The U.S. Dollar Index continues its downside move. The U.S. Dollar Index has recently moved out of a two-month range between 99 and 101 and gained additional downside momentum.
Currently, the U.S. Dollar Index is trying to settle below 98. If this attempt is successful, GBP/USD will get additional support.
The currency markets focus on the upcoming recovery and completely ignore the weekend protests in U.S. cities.
The U.S. President Donald Trump did not unveil new tariffs on China during the news conference on Friday which was a major relief for global markets.
Investors feared that the U.S. may start a new round of the trade war between the two biggest economies at a time when the world economy tries to recover from the coronavirus crisis.
Today, GBP/USD trading will be impacted by May PMI data for U.S. and UK. The UK Manufacturing PMI is expected to increase from 32.6 to 40.7. Analysts expect that the U.S. Manufacturing PMI will also improve from 36.1 to 39.8.
GBP/USD has successfully tested the resistance at the 50 EMA at 1.2350 and maintains the upside momentum it gained after it returned back above 1.2250.
At this point, GBP/USD has good chances to test the next resistance level at 1.2450. If this test is successful, GBP/USD will continue to move towards the high point of its previous trading range at 1.2650.
On the support side, the nearest support for GBP/USD is located at the 20 EMA at 1.2300. In case GBP/USD moves below this level, it will head towards the major support level at 1.2250.
From a big picture point of view, GBP/USD is back to the wide trading range between 1.2250 and 1.2650. The increased demand for riskier assets will continue to serve as a bullish catalyst for GBP/USD, so traders should closely monitor the U.S. Dollar Index in order to evaluate whether the American currency has more room to decline.
For a look at all of today’s economic events, check out our economic calendar.