GBP/USD Forecast: Limited bearish potential

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3052

The UK is working on reopening schools as face masks become mandatory in more places.
UK Gove is confident on a successful Brexit outcome with the EU.
GBP/USD is trading above the 1.3000 level, which limits the bearish potential.

The GBP/USD pair finished the week with modest losses at 1.3050, giving up to the dollar’s demand at the end of the week. The pair hit a 1.3185 on Thursday, its highest since March, underpinned by the greenback’s sell-off and ignoring UK data and Brexit-related headlines. On this last, British Cabinet Minister Michael Gove said that he believes there will be a successful negotiation Brexit outcome with the EU, adding "we are making progress with the EU." No official comments, however, came from the Union.

Meanwhile, the UK is working on plans to reopen schools in September. According to the latest official data, the number of people in hospital being treated for coronavirus has fallen over 95% from the peak of the outbreak. Pubs and restaurants remain open in the kingdom, but alongside schools, could be closed in the case of an outbreak. Over the weekend, news indicated that using face masks has become mandatory in more indoor places in England, Scotland and Northern Ireland.

GBP/USD short-term technical outlook

The daily chart for GBP/USD shows that the pair spent the week in consolidative mode near its recent highs, with the positive momentum easing but far from suggesting a slide. The 20 DMA heads firmly higher below the current level and above the larger ones, as technical indicators ease from overbought readings. In the shorter-term, and according to the 4-hour chart, the pair has settled below its 20 SMA but holds above the larger ones. The Momentum indicator heads firmly lower within negative levels as the RSI consolidates around 42, all of which skews the risk to the downside.

Support levels: 1.3025 1.2980 1.2940

Resistance levels: 1.3065 1.3110 1.3160

View Live Chart for the GBP/USD

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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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