The GBPUSD pair sits at horizontal and dynamic support after last Friday’s NFP report. The pair hovers around the 1.30 area after breaking higher from a triangle as a reversal pattern.
After the upbeat NFP report, the GBPUSD reacted to the strength seen in the USD. It fell from almost 1.32 to the round 1.30 level, also fueled by traders taking profit ahead of the weekend.
Q2 Preliminary GDP in Focus
This week is particularly important for the GBP and the GBPUSD pair. On Wednesday, the Q2 2020 GDP comes out, and everyone wonders how the British economy performed during the pandemic.
If we use similar economies as a benchmark, the outlook is not bright. For instance, the Eurozone economies contracted 12.1% in the same period, with the Spanish economy being hit the worse. Or, the United States GDP, which declined by a little less than 10%.
However, the expectations for the British economic performance are far worse than the ones mentioned earlier. The GDP is expected to drop by over 20% in the second quarter. Any deviation from this number, higher or lower, will send the GBPUSD on a wild move.
Therefore, we can say that the current levels seen in the GBPUSD are just consolidation levels ahead of the important GDP report two days from now.
GBPUSD Technical Analysis
So far, the GBPUSD appeared to have put a double top in place in the 1.3180 area. If the GDP beats expectations, the chances are that the price action will blow that top away. However, until then, the 1.30 acts as support.
Conservatives traders will want to wait to see the 1.3180 resistance broken before going long. If that happens, a stop-loss at the 1.30 is mandatory for the reward to make sense.
On the other hand, aggressive traders can use the current area to open a long position. For these, 1.2750 acts as invalidation, and the risk-reward ratio has better levels. As always, greater risk leads to a bigger reward.
GBPUSD Price Forecast