GBP/USD Daily Forecast – Attempt To Settle Above 1.2750GBP/USD managed to get above the resistance at 1.2750 and tries to develop additional upside momentum.
GBP/USD Video 10.06.20.
British Pound Continues To Enjoy Support
GBP/USD continues its upside move and tries to settle above the nearest resistance level at 1.2750.
The U.S. dollar is losing ground against a broad basket of currencies, and the U.S. Dollar Index is close to 96. Yesterday, the U.S. Dollar Index made an attempt to settle in the range between 96.5 and 97 but found itself under material pressure and continued the downside move.
Interestingly, the previous trading session was not good for stocks but the U.S. dollar did not get enough support. Meanwhile, gold was able to settle above $1700 per ounce.
In my opinion, the recent developments put the safe haven status of the U.S. dollar under question in the near term. It is increasingly likely that traders will use gold to hedge against a potential equity market downside.
Today, the main catalyst for GBP/USD is the U.S. Fed Interest Rate decision. While the rate is expected to stay unchanged, traders will focus on the commentary provided by the Fed Chair Jerome Powell.
A dovish commentary could put additional pressure on the American currency and push the U.S. Dollar Index towards 95. This scenario will be bullish for GBP/USD.
However, a somewhat hawkish commentary could reverse the recent trend. Such a move will likely be fast since the trade against the U.S. dollar is crowded.
GBP/USD breached the resistance at 1.2750 and attempts to settle above it. If GBP/USD manages to stay above this level, it will likely gain additional upside momentum and head towards the next resistance level at 1.2830.
RSI is at high levels but it is not extremely overbought so GBP/USD should have a decent chance to develop momentum given the right catalysts. In this scenario, a successful test of the resistance level at 1.2830 will open the way to the next resistance level at 1.2970.
On the support side, the nearest support level for GBP/USD is at 1.2630. This level has already been tested two times and proved its strength. A move below 1.2630 will lead to increased downside momentum and take GBP/USD closer to the next support level near the 20 EMA at 1.2500.
For a look at all of today’s economic events, check out our economic calendar.