31.08.202010:22 Forex Analysis & Reviews: Analysis and forecast for GBP/USD on August 31, 2020

Despite the continuing twists and turns associated with the achievement of a Brexit deal between the UK and the European Union, as well as very disappointing forecasts of economists about the prospects for the British economy, the pound significantly strengthened against the US dollar at last week's trading. The growth of the GBP/USD currency pair at the trading on August 24-28 was 2%.

As already mentioned in previous articles, the demand for the US dollar as a safe asset during the COVID-19 pandemic has sunk into oblivion. The US currency is under selling pressure across the entire spectrum of the foreign exchange market, and, apparently, this trend has a chance to continue. For more information about the new aspects of monetary policy of the US Federal Reserve System (FRS), read the article on the euro/dollar.

Among the main events of this week that may have an impact on the price dynamics of the pound/dollar pair, it is worth highlighting the PMI in the UK services sector, as well as the speech of the head of the Bank of England, Andrew Bailey. Of the numerous American statistics, the main event will certainly be the data on the US labor market for August, which will be published on Friday, September 4.

Weekly

Well, let's move on to the technical picture for GBP/USD, where first of all it is worth noting the closing price of the last five days - 1.3346. As you can see, in contrast to the euro/dollar, the pound broke the reversal signal, absorbing the growth of the previous candle "Tombstone". At the moment of writing, the pair is slightly declining, so we can assume a pullback to the broken resistance level of 1.3265, after which we can calculate for a resumption of growth.

At the same time, I think it is necessary to remind you that the price zone of 1.3300-1.3350 is quite strong technically, so it is too early to consider its breakdown as true. Also, such an impressive growth of the British currency against the dollar could be influenced by the strong strengthening of the "British" pair with the single European currency. Often, the dynamics of the EUR/GBP cross-rate has a strong impact on the main currency pairs with the euro and the pound. However, let's go back to the GBP/USD. If the upward dynamics of the pair continues, I do not rule out a rise to the psychological level of 1.3500, where the maximum values (1.3513) were shown almost a year ago. In the case of a downward weekly scenario and closing below 1.3265, this resistance level will be considered falsely broken, after which the bears on the British currency will try to continue the pressure.

Daily

This timeframe clearly shows the market's desire to pull back to the broken resistance zone of 1.3282-1.3265. If this happens, you can use this pullback to open long positions on the GBP/USD currency pair. In general, if we talk about trading recommendations, then after such an impressive growth shown last week and such a high closing price, the main idea is to buy, which is better to open after corrective pullbacks and at lower prices. Alternatively, for purchases, you can consider a dedicated area of broken resistance levels, which can now perform a support function.

Since there are no events from the UK or the US in today's economic calendar, trading on GBP/USD will be influenced by market sentiment and technical factors.