GBP/USD Daily Forecast – British Pound Moves Lower Ahead Of BoE Interest Rate Decision

GBP/USD Video 04.02.21.

U.S. Dollar Continues To Gain Ground Against British Pound

GBP/USD is currently trying to settle below 1.3600 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the nearest resistance level which has recently emerged at 91.30. If this test is successful, the U.S. Dollar Index will head towards the next resistance at 91.50 which will be bearish for GBP/USD.

Yesterday, UK reported that Services PMI declined from 49.4 in December to 39.5 in January compared to analyst consensus of 38.8. While the report was better than the analyst forecast, it highlighted the severe blow dealt by the extension of virus containment measures.

In the U.S., Services PMI increased from 54.8 to 58.3 compared to analyst consensus of 57.5. The relative strength of the U.S. recovery may continue to provide material support to the American currency.

Today, foreign exchange market traders will focus on the Bank of England Interest Rate Decision. The rate is expected to stay unchanged at 0.1% as the Bank of England is not ready to step into the negative rate territory. As usual, traders will pay close attention to the bank’s commentary which may have a significant impact on the pound.

Technical Analysis

GBP/USD managed to get below the support at 1.3625 and is moving towards the next support level at 1.3575. If GBP/USD manages to settle below this level, it will get to the test of the next support which is located at the 50 EMA at 1.3560.

A move below the 50 EMA at 1.3560 will open the way to the test of the next support level at 1.3540.

On the upside, the previous support at 1.3625 will likely serve as the first resistance level for GBP/USD. If GBP/USD manages to settle above this level, it will head towards the next resistance which is located at the 20 EMA at 1.3650. A move above the 20 EMA at 1.3650 will push GBP/USD towards the next resistance level at 1.3665.

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