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GBP/USD Holding Key Supports And Showing Positive Signs

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Aayush Jindal

Key Highlights

  • GBP/USD started a sharp decline after trading as high as 1.2812.
  • There are a few important supports near 1.2450 and 1.2400.
  • The US Retail Sales might increase 8% in May 2020 (MoM).
  • The UK Claimant count could change 370K in May 2020, down from the last 856.5K.

GBP/USD Technical Analysis

This month, the British Pound started a strong upward move above 1.2400 against the US Dollar. GBP/USD climbed above the 1.2650 resistance and traded to a new 2-month high at 1.2812.

Looking at the 4-hours chart, the pair started a major downside correction from the 1.2812 high. It broke the 1.2720 and 1.2650 support levels. More importantly, there was a break below a major bullish trend line at 1.2675 on the same chart.

It opened the doors for more losses below the 38.2% Fib retracement level of the upward move from the 1.2075 low to 1.2812 high. However, the pair traded close to a crucial support near the 1.2450 level and the 100 simple moving average (red, 4-hours).

The 50% Fib retracement level of the upward move from the 1.2075 low to 1.2812 high is also near 1.2443. The next major support is seen near the 1.2400 level or the 200 simple moving average (green, 4-hours).

If GBP/USD fails to stay above the 1.2450 and 1.2400 support levels, it could continue to move down. The next key support is near the 1.2250 level. Conversely, the pair could start a fresh increase above the 1.2600 level.

The first major resistance is near the 1.2650 level, above which GBP/USD could resume its uptrend and rally towards the 1.2750 and 1.2800 levels.

Upcoming Economic Releases

  • UK Claimant Count Change May 2020 – Forecast 370K, versus 856.5K previous.
  • UK ILO Unemployment Rate April 2020 (3M) – Forecast 4.5%, versus 3.9% previous.
  • German Consumer Price Index May 2020 (YoY) – Forecast +0.6%, versus +0.6% previous.
  • German Consumer Price Index May 2020 (MoM) – Forecast -0.1%, versus -0.1% previous.
  • German ZEW Business Economic Sentiment Index for June 2020 – Forecast 60, versus 51 previous.
  • US Retail Sales May 2020 (MoM) – Forecast +8%, versus -16.4% previous.
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