GBP/USD Daily Forecast – British Pound Continues To Rally Against U.S. Dollar

GBP/USD Video 24.02.21.

U.S. Dollar Is Losing Ground Against British Pound

GBP/USD gained strong upside momentum on optimism about economic recovery in the UK while the U.S. dollar lost some ground against a broad basket of currencies.

The U.S. Dollar Index remains in the range between the support at the 90 level and the resistance at 90.30. The U.S. Dollar Index has recently made another attempt to settle below the support at 90 but did not manage to develop sufficient downside momentum. If the U.S. Dollar Index declines below this level, it will move towards the next support at 89.75 which will be bullish for GBP/USD.

Yesterday, UK reported that Unemployment Rate increased from 5% in November to 5.1% in December, in line with the analyst consensus. Meanwhile, Claimant Count Change report indicated that the number of people claiming for unemployment benefits decreased by 20,000 in January compared to analyst forecast which called for growth of 25,000.

Today, foreign exchange market traders will likely focus on general market sentiment towards riskier assets. Traders’ increased risk appetite pushed British pound to multi-year highs, and the continuation of the current upside trend mostly depends on market mood.

Technical Analysis

GBP/USD managed to settle above the resistance at 1.4150 and is trying to get above the next resistance level which has emerged at 1.4180. RSI is in the extremely overbought territory, so the risks of a pullback are high.

In case GBP/USD settles above 1.4180, it will head towards the next resistance which is located at the recent highs at 1.4240. No important levels were formed between 1.4180 and 1.4240 so this move may be fast.

On the support side, the previous resistance level at 1.4150 will likely serve as the first support level for GBP/USD. If GBP/USD declines below this level, it will move towards the next support which is located at 1.4100. A move below the support at 1.4100 will push GBP/USD towards the support at 1.4070. I’d note that there are big gaps between levels so traders should be prepared for fast moves.

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