GBP/USD Forecast: Friday falling ahead of Super Saturday, as US COVID-19 worries dominate

Brits will be celebrating this Fourth of July – not due to sympathy with their former colony rebelling and eventually overtaking them as an empire – but as they return to the pubs. UK Prime Minister Boris Johnson's latest round of easing includes the reopening of bars after over three months. Leicester, the midlands city which is experiencing a new COVID-19 outbreak, is excluded.

Grant Shapps, the UK transport minister, also announced that quarantine rules will be relaxed for 50 countries. Will tourists come to the UK? That may begin with a small drip, at least at first. 

While the news cheers up traders and may also support sterling, many Americans across the pond will have bars and restaurants off-limits this Independence Day weekend. Coronavirus cases in the US are surging, hitting a new daily high of 55,000 on Thursday. The safe-haven US dollar has been edging up due to these concerns.

Earlier on Thursday, investors were more enthusiastic, cheered by the Non-Farm Payrolls report. The US gained – or better-said restored – no fewer than 4.8 million jobs, beating economists' estimates for only three million. The Unemployment Rate fell to 11.1%, also exceeding estimates. 

While the rapid recovery is encouraging, the data is from the first half of June – before the second wave hit hard. Higher frequency data such as weekly jobless claims have remained stubbornly high. Gasoline consumption, reservation at restaurants, and traffic at shops have all been dropping throughout June. 

See: Non-Farm Payrolls: Immense uncertainty remains prevalent, markets may react

US stock markets closed off their highs on Thursday as enthusiasm about the labor market faded, but equities are yet to turn south. Will these worries prevail? While Americans are off to a long weekend, states continue publishing COVID-19 statistics and that could impact trading despite thinner liquidity.

The Brexit impasse could continue impacting the pound. While both the EU and the UK aspire to reach a "landing zone" shortly, they remain divergent on opinions – and postponed a meeting between top negotiators. Will there be any breakthrough when talks resume next week?

Johnson expressed the need to get a good deal and is ready for other options. German Chancellor Angela Merkel also said that Europe must prepare for a no-trade-deal Brexit. 

The current, fifth round of talks was supposed to "put the tiger in the tank" as Johnson said, but that is yet to materialize. The EU and the UK disagree over Brussels' demand that London aligns regulations in return for easier market access. 

Overall, pound/dollar has more reasons to fall than rise. 

GBP/USD Technical Analysis

Cable bounced from the lows and topped the 50, 100, and 200 Simple Moving Averages on the four-hour chart. Moreover, momentum remains to the upside. The bullish narrative is partially marred by the failure to break above 1.2545, the peak seen last week. 

Support awaits at the daily low of 1.2440, followed by 1.2360, which was a stepping stone in the recent recovery. The trough of 1.2250 is a strong support line.

Initial resistance awaits at Thursday's peak of 1.2530, followed by 1.2545 mentioned earlier. Next, 1.26 played a role in the past and 1.2685 was a peak in mid-June.