GBP/USD Daily Forecast – British Pound Attempts To Gain More Upside Momentum

GBP/USD Video 24.07.20.

UK Retail Sales Grow By 13.9% In June

GBP/USD continues its attempts to settle above the resistance at 1.2750 as the U.S. dollar is losing ground against a broad basket of currencies while global markets are worried about continued deterioration of U.S. – China relations.

The U.S. Dollar Index is testing the key support level at March lows at 94.65. This is a very important moment for the American currency since a move below this level may trigger an additional sell-off, which would be bullish for GBP/USD.

It should be noted that the U.S. Dollar Index has entered into an oversold territory so there is a material risk of a rebound.

UK has just reported Retail Sales for June. On a month-over-month basis, Retail Sales increased by 13.9%, higher than the analyst consensus which called for growth of 8%. Retail Sales also looked better than analyst forecast on a year-over-year basis, showing a decline of just 1.6%.

Today, UK will also provide Flash Manufacturing PMI and Flash Services PMI reports for July. Manufacturing PMI is expected to increase from 50.1 in June to 52 in July, while Services PMI is projected to grow from 47.1 to 51.5. Numbers above 50 show expansion.

The main problem for the British pound right now is the continued uncertainty around Brexit. Yesterday, EU chief Brexit negotiator Michel Barnier stated that the trade agreement between UK and EU was unlikely unless UK changed its position on fair competition and fisheries.

Technical Analysis

gbp usd july 24 2020

GBP/USD continues to test the major resistance level at 1.2750. The main risk for GBP/USD bulls is the repeat of June trading action when GBP/USD failed to settle above 1.2750 and headed towards the major support level at 1.2250.

The nearest support level for GBP/USD is located at 1.2650. A move below this level will signal that GBP/USD lost upside momentum. In this scenario, the next support is located at the 20 EMA at 1.2610.

On the upside, GBP/USD needs to settle above 1.2750 to have a good chance to develop significant upside momentum. If this happens, GBP/USD will head towards the high of the previous upside move at 1.2815.

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