With the world economy struggling to revive amid COVID-19 pandemic, the British pound (GBP/USD) showed signs of improvement on August 20, 2020, as it got back above 1.3200 against the U.S. dollar, thanks to the recent sell-off.
U.K. reported an increase of 3.6 percent and 1.4 percent in retail sales on a month-over-month basis for July 2020 and on a year-over-year basis for 2020, respectively.
Analysts anticipate further improvement in the British pound value after U.K. released better-than-expected estimates flash manufacturing PMI (53.8) and flash services PMI data (57) for August 2020.
Meanwhile, the U.S. dollar lost its momentum that it gained following the release of Meeting Minutes by the Federal Open Market Committee (FOMC) and fell to 92.50 as measured on the U.S. Dollar Index.
The U.S. initial jobless claims, which highlighted sluggishness in the job market recovery, are to be blamed for the decline in the dollar value.
The rebound in GBP/USD will be tested once it reaches the nearest resistance level of 1.3270 or 1.3300.
Believing a scenario where GBP/USD crosses 1.3300 to be true with no resistance levels to reach further, the British pound would gain more value until it reaches the next resistance level at 1.3425.
Even though GBP/USD continues to receive support at 1.3080 and 1.3110, any fluctuation below the 20 Exponential Moving Average (EMA) will be indicative of a halt to gain in GBP/USD value, leading to increased interest from traders in GBP/USD.
Nevertheless, the market is hoping this upside trend in GBP/USD to continue as any significant decline is managed in no time.