FX.co ★ Hot forecast and trading recommendations for GBP/USD on 09/30/2020

The latest data on the UK lending market failed to stir pound investors, even though the indicators came out better than expected. For example, approved mortgage loans in August were about 84.7 thousand, much higher than the projected 69.0 thousand. Consumer lending also grew by £ 0.3 billion, which indicates a gradual increase in consumer activity. However, although these improvements signal a good recovery in the UK economy, demand for the pound still did not increase in the markets, and this is probably due to the pressure exerted by the current controversy on Brexit, as well as the escalating risk of another pandemic wave in the country.

Number of approved mortgages (UK):

Nonetheless, the issue of economic recovery in the United Kingdom remains the most important. The dismay of traders is most probably due to the just-released second quarter GDP data, which showed an acceleration of economic slowdown from -1.7% to -21.5%. This, of course, is slightly better than the preliminary estimate, which showed a decline in GDP of -21.7%. However, the difference is still rather symbolic, and the fact remains that the UK economy is currently experiencing the worst economic downturn in post-war history.

GDP (UK):

Meanwhile, the final data for the US GDP will be published today, and it should show a decline of about -9.1%. Although this collapse is one of the strongest in history, it is markedly smaller than the fall observed in the United Kingdom. In addition, such a drop is already published on the earlier preliminary data, so it is now hardly a surprise to anyone.

What the investors are looking forward to is the continuous recovery of the US labor market, which could show a growth of about 610 thousand in terms of employment. Its rise in the earlier reports were remarkably without any slowdown, indicating such a good recovery in the sector. In the previous month, employment already rose by 428 thousand. If the upcoming report is exactly what was expected, then demand for the dollar could rise sharply in the market.

Employment Change (United States):

As for the GBP / USD pair, the quote is currently in the stage of a correction, starting from the local low of 1.2674. However, yesterday, a temporary stagnation at 1.2820 / 1.2900 was observed, which means that the correction could end soon.

If we proceed from the current location of the quote, we will see that market participants are trading within the boundaries of the previous price range - 1.2820 / 1.2900.

There is a slowdown in terms of volatility, but given the high dynamics for this month, which is a rare occurrence, it will likely lead to a new round of acceleration in the market.

Thus, in the daily chart, a consistent course of impulses and corrections with a scale of more than 800 points keeps on emerging.

But if the correction ends today, a breakout may occur, and it could lead to a local surge in GBP / USD.

1.2910 ---> 1.2925-1.2955

1.2820 ---> 1.2770-1.2720

Then, if we use indicator analysis, we will see that the indicators on the hourly and daily periods will signal SELL due to the prevailing bearish interest in the market.