GBP/USD Daily Forecast – British Pound Moves Higher Against U.S. Dollar

GBP/USD Video 12.01.21.

British Pound Rebounds After Yesterday’s Sell-Off

GBP/USD is currently trying to settle above the resistance level at 1.3540 while the U.S. dollar is mostly flat against a broad basket of currencies.

Yesterday, the U.S. Dollar Index made an attempt to settle above the resistance at 90.70 but failed to gain sufficient upside momentum and declined towards 90.50. Currently, the U.S. Dollar Index is located close to this level. If the U.S. Dollar Index declines below 90.50, it will move towards the 20 EMA at 90.25 which will be bullish for GBP/USD.

There are no important economic reports scheduled to be released in the U.S. and UK today so foreign exchange market traders will focus on general market sentiment. In addition, traders will keep an eye on the rising U.S. Treasury yields.

The yield of 10-year Treasuries increased from 0.92% at the end of 2020 to 1.15% and provided support to the American currency as traders sold U.S. government bonds in anticipation of another round of stimulus.

Technical Analysis

GBP/USD managed to get above the 20 EMA at 1.3530 and is trying to settle above the resistance at 1.3540. In case this attempt is successful, GBP/USD will gain additional upside momentum and head towards the next resistance level at 1.3575.

A successful test of the resistance at 1.3575 will push GBP/USD towards the next resistance level at 1.3625. No important levels were formed between 1.3575 and 1.3625 so this move may be fast.

If GBP/USD manages to settle above the resistance at 1.3625, it will continue its upside move and head towards the next resistance level at 1.3665.

On the support side, GBP/USD needs to settle below the support area at 1.3530 – 1.3540 to have a chance to develop downside momentum. The next support level for GBP/USD is located at 1.3500.

If GBP/USD declines below the support at 1.3500, it will get to the test of the support level at 1.3485. A move below this level will open the way to another test of the support at 1.3450. This support level has been tested during yesterday’s trading session and proved its strength so GBP/USD will likely need additional catalysts to move below 1.3450.

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