Good day, dear traders!
Last week, the US dollar showed mixed dynamics against its main competitors. In particular, the pound sterling rose to the "American" by 0.28%, but this does not yet give grounds to look with confidence into the positive future of the British currency.
As with other dollar pairs, the course of trading in GBP/USD was determined by news from the US about negotiations between Congress and representatives of US President Trump on the adoption of additional incentives to support the world's leading economy from the consequences of the COVID-19 pandemic. As you know, the negotiations have reached an impasse and have been canceled indefinitely. This weekend, it became known about the cancellation of further negotiations on a trade settlement between the United States and China. Let me remind you that back in January this year, Washington and Beijing concluded the "first phase" of the trade deal, but since then we have not seen any further progress in this direction.
As you know, at the peak of the COVID-19 pandemic, Trump actually accused China of spreading the infection and demanded monetary compensation. Then a diplomatic row broke out, which is also well known. I would like to note that with the approach of the elections, the 45th US President, who is already quite expressive and not very ambiguous in his comments and decisions, is becoming an even more unpredictable politician. I believe that for re-election to a second term, Donald Trump will do everything possible and will surprise or even shock the world community more than once.
As for the economic calendar and important events that can affect the price dynamics of the pound/dollar currency pair, it is necessary to note the publication of the Fed minutes, as well as data on changes in consumer prices in the UK. More details about these and other events will be mentioned on the day of their release, but in the meantime, we will proceed to consider the technical picture for GBP/USD.
Weekly
As you can see, the orange 200 exponential moving average is a serious obstacle to the pair's path in the north direction, which has not allowed the price to go higher for three weeks in a row. I believe that only the breakdown of the 200 EMA and the resistance level of 1.3184 will allow us to count on further growth of the "British". However, do not discount the strong price zone of 1.3200-1.3240, which may not allow the quote to go higher and turn it in the south direction.
However, a lot will depend on the results of the opened weekly trades and their closing price. A break of 200 EMA (1.3145), 1.3184 and 1.3200 with a close above, will signal further growth potential and longer-term goals, which are too early to indicate. If the trading of the current five-day period ends with a decrease and the appearance of a bearish reversal candle with a closing price below the most important psychological and technical level of 1.3000, it is time to think about changing the ascending scenario to a descending one, and therefore prepare for sales.
Daily
Here you can clearly see that the two previous trading days, the bulls for the pound could not pass up the Tenkan line of the Ichimoku indicator. However, the beginning of today's trading is encouraging, regarding the breakdown of Tenkan. At the end of the review, the pair is trading above this line, near 1.3107. If the upward trend continues, the British currency bulls will need to break through the 1.3141 mark and close the daily session higher. This is where the maximum values of Friday's trading were shown and the candle for August 14 had a long upper shadow. The completion of today's trading above Friday's highs will open the way to the resistance area of 1.3184-1.3200, where the future fate of the pound/dollar pair will be decided.
The main trading recommendation for GBP/USD, at the moment, looks like purchases that can be considered after fixing above the 1.3100 mark, after a pullback to the price zone of 1.3105-1.3085. In this case, the quote should be fixed above 1.3100 on the four-hour or hourly timeframes. If bearish candlestick analysis patterns appear on the same timeframes under a strong resistance level of 1.3141, a signal will be received to open short positions with small goals of 30-40 points. By the way, in view of the presence of strong resistance at the top, it is better to fix purchases early, without setting large goals yet.
Good luck!