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GBP/USD Video 01.09.20.
British Pound Continues To Rally
GBP/USD is trying to settle above 1.3400 as the U.S. dollar continues to lose ground against a broad basket of currencies.
The American currency remains under significant pressure, and the U.S. Dollar Index has managed to settle below the 92 level. The U.S. Dollar Index is located at yearly lows and has good chances to develop more downside momentum which would be bullish for GBP/USD.
It looks like traders continue to position themselves for years of low rates in the U.S., and shorting the U.S. dollar becomes a universal option.
The ultra-important U.S. employment reports will be released in the second half of the week so today’s trading dynamics of GBP/USD will mostly depend on market sentiment.
However, traders will soon get a chance to evaluate Manufacturing PMI data for U.S. and UK. U.S. Manufacturing PMI is expected to increase from 50.9 in July to 53.6 in August. UK Manufacturing PMI is projected to grow from 53.3 in July to 55.3 in August.
UK Manufacturing PMI report will likely have a bigger impact on GBP/USD as the British pound gained a lot of ground against the dollar in recent months so expectations for the UK economic reports are rather elevated.
Technical Analysis
GBP/USD gained significant upside momentum after it breached the resistance at 1.3270 and is ready to test the next material resistance at 1.3425. In case this test is successful, GBP/USD will continue its upside move and head towards the next resistance level at 1.3515.
If GBP/USD manages to settle above 1.3515, it will move towards the next resistance level at 1.3615. I’d note that there are material gaps between levels while the current downside momentum in U.S. Dollar Index is strong, so GBP/USD may quickly move between levels if the right catalysts emerge.
On the support side, the nearest support for GBP/USD is located at 1.3270. No important levels were formed between 1.3270 and 1.3425.
In case GBP/USD manages to settle below the support at 1.3270, it will head towards the next support at the 20 EMA at 1.3190.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire