GBP/USD Daily Forecast – British Pound Remains Under Pressure Against U.S. Dollar

GBP/USD Video 03.02.21.

U.S. Dollar Gains Ground Against British Pound

GBP/USD is currently trying to settle below the support at the 20 EMA at 1.3655 while the U.S. dollar is losing some ground against a broad basket of currencies.

Yesterday, the U.S. Dollar Index managed to get above the resistance at 91.10 and made an attempt to develop additional upside momentum but did not manage to get above 91.30 and pulled back. If the U.S. Dollar Index declines below the 91 level, it will head towards the support at the 50 EMA at 90.80 which will be bullish for GBP/USD.

Today, foreign exchange market traders will focus on Services PMI reports from UK and U.S. Analysts expect that UK Services PMI declined from 49.4 in December to 38.8 in January due to the blow dealt by the extension of virus-related measures. In the U.S., Services PMI is projected to grow from 54.8 to 57.5.

The relative strength of the U.S. economic recovery has provided support to the American currency in recent weeks. If the upcoming U.S. economic reports look strong enough, the U.S. dollar may get additional support.

Technical Analysis

GBP/USD managed to get below the support at 1.3665 and is trying to settle below the 20 EMA at 1.3655. If this attempt is successful, GBP/USD will move towards the next support level which is located at 1.3625. This support level has been tested during yesterday’s trading session and proved its strength.

In case GBP/USD declines below the support at 1.3625, it will move towards the next support level at 1.3575. RSI remains in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

On the upside, GBP/USD needs to get back above 1.3665 to have a chance to develop upside momentum in the near term. If GBP/USD settles above this level, it will head towards the next resistance at 1.3710. A successful test of the resistance at 1.3710 will open the way to the test of the next resistance level which is located near the recent highs at 1.3745.

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