GBP/USD Daily Forecast – Attempt To Move Above 1.3000

GBP/USD Video 21.10.20.

British Pound Continues To Move Higher

GBP/USD is moving towards the test of the nearest resistance at 1.3000 as the U.S. dollar continues to lose ground against a broad basket of currencies.

The U.S. Dollar Index has managed to get below the support at 93 and is heading towards the support at 92.80. If the U.S. Dollar Index moves below the support at 92.80, it will head towards 92.50 which will be bullish for GBP/USD.

UK has just provided inflation data for September. Inflation Rate increased by 0.5% year-over-year, fully in line with the analyst consensus. On a month-over-month basis, Inflation Rate grew by 0.4%.

Meanwhile, Core Inflation Rate increased by 0.6% compared to analyst consensus which called for growth of 1.3%. The softness of Core Inflation Rate will likely attract Bank of England’s attention.

At this point, there are no additional developments on the Brexit front. However, the market believes that EU and UK will ultimately reach a deal, and this optimism is pushing GBP/USD higher.

Technical Analysis

GBP/USD gained material upside momentum and is heading towards the resistance at 1.3000. GBP/USD has mostly ignored this level in previous trading sessions but it may still face some resistance at 1.3000.

If GBP/USD manages to get above 1.3000, it will head towards the next resistance level at 1.3030. RSI is in the moderate territory so there is plenty of room to gain upside momentum in case the right catalysts emerge.

A move above 1.3030 will push GBP/USD towards October highs near 1.3070. Most likely, GBP/USD will need additional catalysts to settle above this resistance level. If GBP/USD moves above October highs, it will gain upside momentum and move towards the next resistance level at 1.3110.

On the support side, the previous resistance level at the 50 EMA at 1.2950 will likely serve as the first support level for GBP/USD. In case GBP/USD manages to settle below this level, it will gain downside momentum and decline towards the next support level at 1.2890.  A move below 1.2890 will signal that GBP/USD is ready to develop a new downside trend.

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