GBP/USD Daily Forecast – British Pound Tries To Develop Upside Momentum

GBP/USD Video 26.08.20.

All Eyes On U.S. Durable Goods Orders Report

GBP/USD managed to settle above the resistance at 1.3110 and tries to continue its upside move as the U.S. Dollar Index declined closer to the 93 level.

The U.S. Dollar Index made an attempt to settle below 93 after a report showed that U.S. consumer confidence declined to levels not seen in many years as consumers were worried about job security.

Meanwhile, U.S. New Home Sales data was encouraging since New Homes Sales increased by 13.9% month-over-month in July compared to analyst consensus which called for growth of 1.3%.

The challenges posed by the pandemic and low interest rate environment continue to fuel strong growth in the housing sector which is good for the economy.

Today, traders will focus on U.S. Durable Goods Orders report. Durable Goods Orders are projected to increase by 4.3% in July. Any softness in Durable Goods Orders will be interpreted as a sign that economic recovery is slowing down due to the continued spread of coronavirus.

The main event of the week for the currency markets is Fed Chair Jerome Powell’s speech at Jackson Hole Economic Policy Symposium which is due on Thursday.

The markets expect that Powell will deliver a very dovish speech so any deviation from this narrative may provide significant support to the U.S. dollar.

Technical Analysis

gbp usd august 26 2020

GBP/USD was able to get above the nearest resistance at 1.3110 and will try to develop more upside momentum.

The next resistance for GBP/USD is located at the recent highs near 1.3270. There are no material levels between 1.3110 and 1.3270. However, such levels may be developed later in case GBP/USD stays within this range for several trading sessions.

On the support side, the previous resistance level at 1.3110 will likely serve as the first important support level for GBP/USD. If GBP/USD manages to settle below this level, it will head towards the next support level at the 20 EMA at 1.3080.

In case GBP/USD moves below the 20 EMA, it will likely gain material downside momentum and head towards August lows at 1.2980.

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