GBP/USD Recovery Could Face Sellers Near 1.3000

Technical analysis of Forex market

Key Highlights

  • GBP/USD traded to a new multi-week low at 1.2762 before starting an upside correction.
  • A crucial bearish trend line is forming with resistance near 1.2940 on the 4-hours chart.
  • The UK Claimant count could change 100K in August 2020, more than the last 94.4K.
  • The US Industrial Production might increase 1% in August 2020 (MoM).

GBP/USD Technical Analysis

In the past few days, the British Pound declined heavily below 1.3200 against the US Dollar. GBP/USD even broke the 1.3000 and 1.2950 support levels to move into a negative zone.

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Looking at the 4-hours chart, the pair traded to a new multi-week low at 1.2762, and settled well below both the 200 simple moving average (green, 4-hours) and the 100 simple moving average (red, 4-hours).

Recently, the pair started an upside correction above the 1.2820 and 1.2850 levels. The pair recovered above 1.2880 and tested the 50% Fib retracement level of the downward move from the 1.3035 swing high to 1.2762 low.

On the upside, there are many hurdles for GBP/USD near 1.2940, 1.2950, 1.2970 and 1.3000. There is also a crucial bearish trend line forming with resistance near 1.2940 on the same chart.

If there is a successful break above the trend line and 1.3000, the pair could correct higher towards the 1.3150 resistance zone or the 200 simple moving average (green, 4-hours).

Conversely, the pair could resume its decline from the 1.2950 resistance or 1.3000. The first key support is near the 1.2820 level, followed by the 1.2760 zone. Any further losses could open the doors for more losses towards the 1.2500 support.

Looking at EUR/USD, the pair remained well supported above 1.1820. Conversely, USD/JPY is declining and showing bearish signs below 106.20.

Upcoming Economic Releases

  • UK Claimant Count Change Aug 2020 – Forecast 100K, versus 94.4K previous.
  • UK ILO Unemployment Rate July 2020 (3M) – Forecast 4.1%, versus 3.9% previous.
  • German ZEW Business Economic Sentiment Index Sep 2020 – Forecast 69.8, versus 71.5 previous.
  • US Industrial Production August 2020 (MoM) – Forecast 1.0%, versus 3.0% previous.