Good day, dear traders!
The US dollar continues to lose its previously won positions across the entire spectrum of the currency market. Moreover, the weakening of the US currency is increasing every day. However, the GBP/USD currency pair has always been distinguished by its originality, and we will see this again when considering the price charts. In the meantime, a little bit about the external background and macroeconomic events that are expected by the end of the week's trading for the pound/dollar.
The situation with the spread of COVID-19 on a global scale continues to be quite tense. A new hotbed of the hated pandemic has broken out in Mexico, where the daily number of infected people hovers around 40 thousand. In some countries, there are also outbreaks of coronavirus. I don't think it makes sense to give full statistics on countries now, but something else is important. The epidemic is still alive, and it is not yet completely defeated, which increases the risks for the global world economy.
Now about today and tomorrow's macroeconomic statistics, which can affect the price movement of the pound/dollar currency pair. Today is a relatively calm day. From the UK at 11:00 (London time), a report on the balance of industrial orders of the Confederation of British Industrialists will be published, and from the USA at 13:30 (London time) data on initial claims for unemployment benefits will be received.
Tomorrow, we expect much more important statistics. From the UK, retail sales data for June will be published at 07:00 (London time), and PMI indices in the manufacturing and services sector will be released at 09:30 (London time).
On Friday, the United States will also present data on similar PMI indices to market participants, as well as publish the number of new home sales.
Daily
As noted at the beginning of the article, the pound/dollar pair, like many others, has its characteristic style. If the euro/dollar ended yesterday's trading with strong growth, then the GBP/USD pair was much more difficult. In many ways, this situation was influenced by the growth of the euro/pound cross, the review of which is scheduled for publication tomorrow.
Initially, the pound/dollar pair fell to one of the broken resistance levels of 1.2648, where it found support and began to actively recover the losses. Thus, for those who wanted to buy sterling, almost ideal conditions were created - a fairly deep pullback in the current conditions and the opportunity to buy at a fairly attractive price.
Today, at the time of writing, the pair is trading with a slight decline near 1.2722 and shows a willingness to absorb the growth of yesterday's Doji candle with a decent lower shadow. The current resistance of sellers is in the area of 1.2766. If this level is broken, the pound/dollar will rush to the next resistance level, which passes at 1.2811.
A bearish scenario seems unlikely. To implement it, you need to rewrite yesterday's lows at 1.2642, and then test the Tenkan line of the Ichimoku indicator, which is located at 1.2622, for a breakdown. I believe that for such a development of events, the situation on the foreign exchange market should radically change in favor of the US dollar. Only here, the prerequisites for such changes are not yet observed.
H1
As can be seen on the hourly chart, I stretched the Fibo grid to 1.2517-1.2766 growth. Earlier, the pair made a classic correction to the middle of this movement, after which it turned back towards the main upward movement.
Given the technical picture on these two timeframes, the weakness of the US dollar and the market's desire to move north, the main trading recommendation for the pound/dollar pair is to buy after falling into the price zone of 1.2720-1.2700. At the same time, the pair may rush to break through the resistance of 1.2766 without a likely pullback. In this case, I recommend not to rush and refrain from opening long positions on the pound/dollar pair. Buying under resistance is always not comfortable and risky enough, especially since the next resistance of sellers can be expected in the strong technical area of 1.2800-1.2815. If bearish reversal patterns of candle analysis appear in this area on the four-hour and (or) hourly charts, you can try neat sales with a small stop and the nearest goals in the area of 1.2750-1.2730. With this positioning, I do not recommend entering large volumes, because the position is against the current upward trend.
Good luck!
