GBP/USD Daily Forecast – Resistance At 1.2925 In Sight

GBP/USD Video 16.09.20.

British Pound Continues Its Rebound

GBP/USD continues its rebound and is trying to settle above 1.2900 as the U.S. dollar remains flat against a broad basket of currencies ahead of U.S. Federal Reserve Interest Rate Decision.

A recent Reuters report suggested that Britain was ready to offer some concessions on fisheries in its current trade negotiations with the EU.

Currently, traders are worried about the possibility of a hard Brexit which will be bearish for GBP/USD so any positive news on the Brexit front can provide additional support to the British pound.

The key question for the market is whether UK is serious about breaching the Brexit Withdrawal Agreement and breaking the international law or it is using this option as a negotiation tactic. This uncertainty will continue to inspire volatility in GBP/USD trading.

UK has just reported inflation data for August. Core Inflation Rate increased by 0.9% year-over-year compared to analyst consensus which called for growth of 0.6%. On a month-over-month basis, Core Inflation Rate was -0.6% compared to consensus of -0.9%.

Inflation Rate was 0.2% year-over-year and -0.4% month-over-month, stronger than the analyst consensus. While inflation was a bit higher than expected, prices remain weak, suggesting that the Bank of England has plenty of room for additional monetary easing if it believes that such measures are appropriate.

Technical Analysis

GBP/USD is currently trying to settle above 1.2900. If this attempt is successful, GBP/USD will test the nearest resistance level at 1.2925.

A move above 1.2925 will open the way to the test of the significant resistance level at the 50 EMA at 1.2990. In case GBP/USD manages to settle above the 50 EMA, it will get to the test of the next important resistance level at the 20 EMA at 1.3025.

On the support side, the nearest support level for GBP/USD is located at 1.2880. If GBP/USD declines below this level, it will likely gain more downside momentum and head towards the next support level at 1.2815.

A move below 1.2815 will open the way to the test of the next support level at the recent lows at 1.2750.

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