GBP/USD Daily Forecast – Another Test Of Resistance At 1.3745

GBP/USD Video 01.02.21.

British Pound Starts The Week On A Strong Note

GBP/USD  continues its attempts to settle above the resistance level at 1.3745 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the nearest support level at 90.50. If this test is successful, the U.S. Dollar Index will head towards the next support level which is located at the 20 EMA at 90.40 which will be bullish for GBP/USD.

Today, foreign exchange market traders will focus on Manufacturing PMI data from UK and U.S. Analysts expect that UK Manufacturing PMI declined from 57.5 in December to 52.9 in January. In the U.S., Manufacturing PMI is projected to increase from 57.1 to 59.1.

Interestingly, China’s Manufacturing PMI declined from 53.0 in December to 51.5 in January compared to analyst consensus of 52.7. The report was significantly weaker than expected, and it looks like continued problems on the virus front in Europe have put some pressure on China’s manufacturing segment.

Technical Analysis

GBP/USD is currently testing the nearest resistance level which is located at 1.3745. This resistance level has already been tested many times and proved its strength.

If GBP/USD manages to settle above this level, it will gain additional upside momentum and head towards the next resistance at 1.3785. RSI is in the moderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.

In case GBP/USD settles above the resistance at 1.3785, it will get to the test of the next resistance level at 1.3800. It should be noted that GBP/USD has not visited this territory for several years, and it remains to be seen whether previous levels will be relevant for today’s trading.

On the support side, the nearest support level for GBP/USD is located at 1.3710. If GBP/USD declines below this level, it will move towards the next support near the 20 EMA at 1.3665. A successful test of the support at the 20 EMA will open the way to the test of the next support at 1.3625.

For a look at all of today’s economic events, check out our economic calendar.