GBP/USD Daily Forecast – British Pound Gains Ground Amid Brexit Optimism

GBP/USD Video 14.12.20.

EU And UK Extend Deadline On Brexit Negotiations

GBP/USD is currently trying to settle above the resistance at the 20 EMA at 1.3320 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index remains in the range between the support at 90.50 and the resistance at 91. If the U.S. Dollar Index manages to settle below the support level at 90.50, it will gain downside momentum and head towards the 90 level which will be bullish for GBP/USD.

UK Prime Minister Boris Johnson and the President of the European Commission Ursula von der Leyen agreed to extend Brexit talks for a few more days. This decision provided significant support to the pound which has recently traded below 1.3150 and then managed to get back above 1.3300.

While traders are optimistic, it remains to be seen whether UK and EU will be able to reach a compromise deal as negotiations have failed to deliver any tangible progress for months.

If Britain leaves the EU without a deal, the British pound will find itself under material pressure, and EUR/USD may also move lower.

There are no important economic reports scheduled to be released today in the U.S. and UK so foreign exchange market traders will mostly focus on Brexit updates.

Technical Analysis

GBP/USD is testing the nearest resistance level at the 20 EMA at 1.3320. If this test is successful, GBP/USD will gain additional upside momentum and head towards the next resistance level at 1.3400. There are no important levels between 1.3320 and 1.3400 so this move may be fast.

In case GBP/USD settles above 1.3400, it will head towards the next resistance level at 1.3440. A move above this level will push GBP/USD towards the resistance at 1.3485.

On the support side, the nearest support level for GBP/USD is located at 1.3300. If GBP/USD declines below this level, it will head towards the next support at 1.3270. A move below the support at 1.3270 will open the way to the test of the support level at the 50 EMA at 1.3230.

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