GBP/USD Forecast: No reasons for a directional move
GBP/USD Current price: 1.3062
- UK trade talks with different economies showing no signs of progress.
- UK PM Johnson announced another round of stimulus, focused in construction.
- GBP/USD in a technical stalemate as both currencies could be seen as weak.
The GBP/USD pair reached a lower low for the week at 1.2980 but recovered from the mentioned low to settle once again around 1.3060. The decline and the later recovery were once again about the dollar, as speculative interest continues to ignore UK news. Given the lack of progress in trade talks with the EU, the UK has shifted its attention to other economies. The kingdom is now in talks with the US, although little progress has been made on that front, particularly ahead of US elections by the end of the year.
Earlier on the day, UK PM Johnson announced another round of stimulus, focused in home construction and infrastructure, aimed to boost the economy. The report suggested investment of around £900 million, £360m of which would be allocated towards delivering 26,000 new homes on brownfield land. Nevertheless, the latest lockdown in the London area amid resurgent coronavirus cases cooled down demand for Sterling.
The UK didn’t release relevant macroeconomic data this Tuesday. Wednesday’s calendar includes the final version of the final July Markit Services PMI, foreseen unchanged at 56.6.
GBP/USD short-term technical outlook
The GBP/USD pair has made little progress since the latest update, pretty much unchanged for a third consecutive day. In the short-term picture, the risk remains skewed to the downside, as, in the 4-hour chart, the pair is trading below its 20 SMA, which loses bullish strength. The Momentum indicator, in the meantime, resumed its decline within negative levels, while the RSI has stabilized within neutral readings. Broad dollar’s weakness prevents the pair from falling, and it would take a strong shift in that situation to see the Pound giving up to local news.
Support levels: 1.3020 1.2980 1.2935
Resistance levels: 1.3090 1.3125 1.3160
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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.
