GBP/USD Forecast: Further gains linked to persistent dollar’s weakness

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2621

No progress in Brexit talks, with remaining “significant differences” between the US and the EU.
UK PM Johnson wore a mask in public for the first time, asked for a “stricter” approach to its use.
GBP/USD is neutral-to-bullish, could gather momentum once above 1.2690.

The GBP/USD pair hit 1.2663 on Friday, unable to surpass its weekly high and retreating to settle at 1.2621. The rally was the result of the broad dollar’s weakness, as news coming from the UK lend no support to the Pound. Market players ignored headlines indicating no progress in Brexit talks throughout the week, with remaining “significant differences” on a number of important issues.

By the end of the week, UK PM Johnson said that he hopes to have a V-shape economic recovery, but added that the government cannot be certain. He also said that a “stricter” approach to the use of face masks in the kingdom is needed, with Johnson wearing one for the first time when in public ever since the pandemic hit the UK. At the beginning of the week, BOE’s Governor Bailed is due to participate in a panel discussion with the Federal Reserve Bank of New York and could make some comments about future monetary policies.

GBP/USD short-term technical outlook

The GBP/USD pair is near the one-month high set at the beginning of July at 1.2669, neutral-to-bullish according to the daily chart. The pair has held for a fourth consecutive day above its 20 and 100 SMA, with sellers aligned ahead of a flat 200 SMA, this last around 1.2690. Technical indicators, in the meantime, hold within positive levels but lack directional momentum. In the 4-hour chart, a bullish 20 SMA provides dynamic support, now at 1.2595, but keeps heading north above the larger ones. Technical indicators, in the meantime, hold directionless well into positive ground, limiting the chances of a downward extension in the near-term.

Support levels: 1.2630 1.2595 1.2550

Resistance levels: 1.2685 1.2730 1.2770

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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