GBP/USD

The U.K. is scheduled to announce its Composite PMI and Services PMI figures for July with forecast at 57.1 and 56.6 respectively indicating expansion in the economy. However, when we consider the macro view of the economy, there are worrying signs which point to a deterioration in the economic outlook. The U.K. GDP was initially forecast to contract by 11.5% this year, however this has been revised significantly lower to 17%. This is on the backdrop of UK banks bracing for a $22 billion loss on loans which will invariably lead to restructuring and cost cutting. Other worrying signs include certain parts of the country reinstating lockdown as the number of coronavirus infections continue to rise. Furthermore, Brexit remains a concern without a deal in place and the deadline approaching. Therefore, the outlook for the U.K. remains negative however, due to the weakness in the U.S. Dollar, the rally we have seen over the last few weeks has helped lift these currencies and metals to higher levels. However, the U.S. elections could see the fortunes of the U.S. Dollar improve. The U.S. and China are also scheduled for a video conference on 15th August 2020 to discuss the trade deal. So there are signs that could caused the U.S. Dollar to find support into the latter part of the year. The expectation for the Pound and other asset classes in the short term will be continued uptrend. The Pound has resistance around 1.3169 – 1.3210. The inability to close above these levels will indicate potential consolidation and reversal into the end of the year.