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GBP/USD Tested Key Support, Dollar Corrects Higher

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Aayush Jindal

Key Highlights

  • GBP/USD starts a sharp decline from the 1.3625 resistance zone.
  • A crucial bullish trend line is forming with support near 1.3180 on the daily chart.
  • The UK Gross Domestic Product could grow 15.5% in Q3 2020 (QoQ).
  • The US Gross Domestic Product could rise 33.1% in Q3 2020 (QoQ).

GBP/USD Technical Analysis

After a steady increase, the British Pound formed a local top near 1.3625 against the US Dollar. GBP/USD started a sharp decline below 1.3500 and it even broke the 1.3400 level.

Looking at the daily chart, the pair opened the week with a gap lower below the 1.3500 support level. The bulls faced an increase in selling pressure and the pair declined heavily below the 1.3400 level.

The decline gained pace and the pair even spiked below 1.3200. However, the pair found bids near a major support zone at 1.3180. There is also a crucial bullish trend line forming with support near 1.3180 on the same chart.

The next major support is near the 1.3100 level and the 100-day simple moving average (red). If there are more downsides, the pair could start a sustained decline towards 1.2850 or even towards the 200-day simple moving average (green).

On the upside, the pair is facing hurdles near the 1.3450 level. The next major resistance is near the 1.3500 level, above which it could revisit this month’s high in the near term.

Looking at EUR/USD also spiked below 1.2150, but is stayed well above the 1.2100 support level. Overall, the greenback corrected higher, but it is still facing a lot of hurdles on the upside against majors such as AUD, NZD, and CAD.

Upcoming Economic Releases

  • UK Gross Domestic Product Q3 2020 (QoQ) - Forecast +15.5%, versus +15.5% previous.
  • US Gross Domestic Product Q3 2020 – Forecast +33.1% versus previous +33.1%.
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