Yahoo Finance GBP/USD Daily Forecast – Test Of Key Resistance At 1.2650
GBP/USD Video 05.06.20.
Safe Haven Assets Remain Under Pressure As Traders Bet On Robust Recovery
GBP/USD continues its upside move as the U.S. dollar loses ground against a broad basket of currencies.
The U.S. Dollar Index managed to get below the 97 level and has settled closer to 96.5. The main reason for the weakness of the U.S. dollar is the widespread optimism in the global markets.
Traders anticipate swift recovery and bet that the unprecedented monetary stimulus from the world central banks will push asset prices up.
In this environment, safe haven assets like the U.S. dollar lose support while riskier currencies like the British pound enjoy increased demand.
The market continues to ignore grim economic data. Yesterday, the U.S. reported that Continuing Jobless Claims increased to 21.5 million, a sign that people had trouble finding new jobs after they were laid off.
Today, the market will digest data on U.S. Non Farm Payrolls and U.S. Unemployment Rate for May. The Non Farm Payrolls report is expected to show a loss of 8 million jobs compared to a loss of 20.5 million jobs in April.
Unemployment Rate is expected to increase from 14.7% in April to 19.8% in May as the economy continued to suffer from the coronavirus crisis.
Technical Analysis
GBP/USD is testing the key resistance level at 1.2650. Previously, GBP/USD made two attempts to settle above 1.2650 but faced very significant resistance.
This time, GBP/USD has better chances to settle above this level as the U.S. dollar is under pressure against a broad basket of currencies. In case GBP/USD manages to get above 1.2650, it will gain additional upside momentum and head towards the next resistance level at 1.2750.
A successful test of the resistance at 1.2750 will open the way to the next resistance level at 1.2830.
On the support side, GBP/USD has just confirmed the support at 1.2500. This is the first major support level, and no material levels were formed between 1.2500 and 1.2650. In case GBP/USD loses upside momentum, it could quickly return to the support at 1.2500.
If GBP/USD manages to settle below the support level at 1.2500, it will gain downside momentum and head towards the 20 EMA near 1.2400.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
