FX.co ★ Analysis and forecast for GBP/USD on July 22, 2020

Good day, dear traders!

In yesterday's trading, the pound/dollar currency pair continued its upward dynamics and ended Tuesday's session at 1.2727. We will move on to the analysis of the technical picture for GBP/USD a little later, but for now we will talk about the topical topic of COVID-19, which, with all our desire, we can not avoid.

First of all, I would like to note that the insidious pandemic is breaking out with new force in a number of countries around the world. At the same time, in my opinion, it does not matter whether it is the second wave or the fifth. It is important that the victory over COVID-19 is still very far away. I am afraid that until an effective vaccine against a new type of coronavirus infection is invented, the epidemic will not be defeated. At the moment, the COVID-19 pandemic vaccine is undergoing the final stage of testing in several countries, including Russia. So far, the preliminary results look promising, and this has been a factor in increasing the risk appetite of most investors. Everyone is waiting and hoping that soon the clinical trials of the COVID-19 vaccine will end with a positive result.

If you look at today's economic calendar, no macroeconomic reports from the UK are planned. The United States of America will provide data on the housing price index and home sales in the secondary market. Agree, not the most important statistics.

I believe that market participants will take into account the technical component, as well as news related to COVID-19 and trade relations between Washington and Beijing.

Daily

As previously expected, the pair continued to grow and reached the price target, which was repeatedly indicated in the area of 1.2700-1.2730. Despite the current weakness of the US dollar, I would not discount the US currency and believe that the "green" has no chance of a comeback.

If you look closely at the technical picture that is observed on the daily timeframe, we see that yesterday the pair rose to 1.2766 and tried to break through another strong resistance of sellers at 1.2754. However, the bulls failed to do this for the pound, and as a result, yesterday's candle formed a not so small upper shadow, which always puts a little strain on those who are purchasing and hope for continued movement in the north direction.

At today's trading at the moment of writing, the pair is slightly declining, trading near 1.2715. I believe that this is nothing more than a correction to the previous strong two-day growth, the targets of which we will try to determine in smaller time intervals. To talk about a reversal, you need to see confirmation signals on the higher timeframes, namely on the daily, or even better, weekly charts.

H1

Stretched the grid of the Fibonacci tool to the growth of 1.2517-1.2766. As you can see, the pair has already corrected to the first pullback level from this movement of 23.6, from which it is trying to rebound to continue the upward dynamics.

I will immediately go to the trading recommendations for the GBP/USD currency pair.

It is quite natural that in the current situation, the main trading idea should be considered purchases. I recommend taking a closer look at opening long positions on the pound, after short-term declines in the price area of 1.2690-1.2670. As you can see, there is a Fibo level of 38.2 from the indicated rise, as well as a broken resistance of 1.2686 and 50 simple moving average. It is also worth noting that the pair has already received support near the 1.2670 mark.

It is more risky and aggressive to try to buy sterling from current prices, but in this case it is better to hide the stop below 1.2668.

As noted above, do not underestimate the US currency, which under certain circumstances can start a fairly sharp and powerful recovery. At least, those who want to sell GBP/USD can count on a corrective pullback, which will be signaled by the appearance of candle signals in the price zone of 1.2725-1.2755.

Good luck!