GBP/USD Daily Forecast – British Pound Pulls Back After Yesterday’s Upside Move

GBP/USD Video 04.05.21.

British Pound Is Losing Ground Against U.S. Dollar

GBP/USD is currently trying to get to the test of the 20 EMA at 1.3870 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to get back above the 91 level and is heading towards the resistance at the 20 EMA at 91.30. If the U.S. Dollar Index manages to settle above the 20 EMA, it will gain upside momentum and head towards the next resistance at 91.50 which will be bearish for GBP/USD.

Yesterday, U.S. reported that Manufacturing PMI increased from 59.1 in March to 60.5 in April compared to analyst consensus of 60.6. Construction Spending grew by 0.2% month-over-month in March while analysts expected that it would grow by 1.9%.

Today, foreign exchange market traders will have a chance to take a look at the final reading of UK Manufacturing PMI report for April. Analysts expect that UK Manufacturing PMI increased from 58.9 in March to 60.7 in April.

Technical Analysis

GBP/USD faced resistance at 1.3900 and pulled back. Currently, GBP/USD is trying to get to the test of the nearest support level which is located at the 20 EMA at 1.3870.

If GBP/USD manages to settle below the support at 1.3870, it will head towards the next support at the 50 EMA at 1.3845. In case GBP/USD declines below the 50 EMA, it will move towards the support level at 1.3800. This support level has been tested several times during recent trading sessions and proved its strength.

On the upside, GBP/USD needs to settle above the resistance at 1.3900 to have a chance to continue its rebound. If GBP/USD gets above this level, it will head towards the next resistance at 1.3920.

A successful test of the resistance at 1.3920 will open the way to the test of the next resistance at 1.3950. If GBP/USD settles above this level, it will head towards the resistance at 1.3980.

From a big picture point of view, GBP/USD remains range-bound, and it will likely need additional catalysts to gain momentum.

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