GBP/USD Daily Forecast – U.S. Dollar Loses Ground Amid U.S. Stimulus Uncertainty

Vladimir Zernov
·2-min read

GBP/USD Video 13.08.20.

U.S. Stimulus Package Negotiations Have Stalled

GBP/USD moved closer to the high end of the trading range between the support at 1.3010 and the resistance at 1.3110 as the U.S. dollar started to lose ground against a broad basket of currencies amid uncertainty regarding the new coronavirus aid package.

The U.S. Dollar Index has settled below 93.50 and tries to get to the test of the 93 level. If this happens, GBP/USD will have a good chance to test the nearest resistance level at 1.3110.

In the U.S., talks between Republicans and Democrats have stalled as both sides accused each other for failure to reach consensus on the new coronavirus aid package deal.

U.S. House Speaker Nancy Pelosi, a Democrat, stated that negotiators remained miles apart and that Republicans would have to come back to the table to continue negotiations.

Meanwhile, U.S. Treasury Secretary Steven Mnuchin argued that Democrats had no interest in negotiating.

The U.S. clearly needs another round of stimulus to boost consumer spending and support economy so current problems on the negotiation front put pressure on the U.S. dollar.

However, it looks like traders believe that Republicans and Democrats will ultimately reach a deal. Otherwise, the U.S. dollar would have experienced more serious weakness.

Technical Analysis

GBP/USD has recently failed to settle below the support level at 1.3010 and rebounded closer to the higher end of the current range at 1.3110.

In case GBP/USD manages to settle above the resistance at 1.3110, it will likely gain upside momentum and head towards the next resistance level near the recent highs at 1.3200.

RSI is in the moderate territory so there is plenty of room to develop upside momentum in case the right catalysts emerge.

On the support side, a move below the nearest support level at 1.3010 will open the way to the test of the next support level at the recent lows at 1.2980. The 20 EMA is in the nearby so this level is set to provide strong support to GBP/USD.

A move below the 20 EMA will be problematic for GBP/USD bulls since GBP/USD will likely gain significant downside momentum and head towards 1.2900.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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