GBP/USD is trying to settle below 1.2850 as the U.S. dollar is gaining some ground against a broad basket of currencies.
The U.S. Dollar Index did not settle below the 50 EMA at 93.90 and is attempting to get back above the 94 level. If the U.S. Dollar Index heads to the nearest resistance level at 94.20, GBP/USD will find itself under additional pressure.
The UK has just provided the final reading of GDP Growth Rate report for the second quarter. On a quarter-over-quarter basis, GDP Growth Rate was -19.8% compared to analyst consensus of -20.4%. Year-over-year, GDP declined by 21.5%.
Not surprisingly, Business Investment suffered in the second quarter and declined by 26.5% quarter-over-quarter.
The UK housing market remains a bright spot. Nationwide Housing Prices increased by 0.9% month-over-month compared to analyst consensus which called for growth of 0.5%. Year-over-year, Nationwide Housing Prices were up by 5%.
A combination of low interest rates and unprecedented monetary stimulus continued to provide support for the housing market. However, it remains to be seen whether this strength will be carried into 2021 after the initial uptick in demand fades.
GBP/USD failed to settle above the nearest resistance level at the 20 EMA at 1.2885 and declined below 1.2850.
The nearest support level for GBP/USD is located at 1.2780, although it may also receive some support at 1.2815. In case GBP/USD manages to settle below the support at 1.2780, it will quickly move to the test of the material support level at 1.2750.
A move below 1.2750 will signal that GBP/USD is ready to continue its downside move. In this case, GBP/USD will head towards the major support level at 1.2650.
On the upside, the 20 EMA continues to serve as a major obstacle on the way up for GBP/USD. In recent trading sessions, GBP/USD made several attempts to settle above this level but failed to gain sufficient upside momentum.
If GBP/USD moves above the 20 EMA, it will head to the test of the next resistance level at the 50 EMA at 1.2930. A move above the 50 EMA will open the way to the next resistance at 1.3000. #GBP/USD##FX#
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