GBP/USD Daily Forecast – Another Test Of Support At 1.2890

GBP/USD Video 02.11.20.

British Pound Is Under Pressure As England Enters Its Second Lockdown

GBP/USD is trying to get below the support at 1.2890 as the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has managed to get above the nearest resistance level at 94 and is trying to gain additional upside momentum. The next resistance for the U.S. Dollar Index is located at 94.20. If the U.S. Dollar Index settles above this level, it will move towards 94.50 which will be bearish for GBP/USD.

Over the weekend, UK Prime Minister Boris Johnson imposed a new lockdown on England as the situation with coronavirus continued to get worse. The lockdown was imposed until December 2, 2020 and will surely deal another blow to the UK economy so the pound may find itself under increased pressure.

Today, the UK will provide the final reading of the Manufacturing PMI report for October. Analysts expect that Manufacturing PMI will decline from 54.1 in September to 53.3 in October. In the U.S., Manufacturing PMI is projected to grow from 53.2 to 53.3.

Technical Analysis

GBP/USD continues its attempts to settle below the nearest support level at 1.2890. If GBP/USD manages to settle below this level, it will gain additional downside momentum and head towards the next support level at 1.2815.

While GBP/USD has lost plenty of ground in recent trading sessions, RSI remains in the moderate territory so there is plenty of room to gain downside momentum in case the right catalysts emerge. In addition, there are no material levels between 1.2815 and 1.2890 so a move below the support at 1.2890 may lead to a sell-off.

If GBP/USD declines below the support at 1.2815, it will head towards the next support level at 1.2780. A move below the support at 1.2780 will push GBP/USD towards the support at 1.2750.

On the upside, GBP/USD needs to stay above 1.2890 to have a chance to develop upside momentum. The nearest resistance for GBP/USD is still located at the 50 EMA at 1.2965. The 20 EMA is in the nearby so this resistance level is set to be a strong obstacle on the way up for GBP/USD. A move above this level will open the way to the test of the next resistance at 1.3000.

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