GBP/USD Daily Forecast – Resistance At 1.3485 In Sight

GBP/USD Video 04.12.20.

British Pound Gained Strong Upside Momentum

GBP/USD is trying to continue its upside move while the U.S. dollar remains under pressure against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at 91 and moved towards the next support level at 90.60. Currently, the U.S. Dollar Index continues to test this support level. If the U.S. Dollar Index settles below 90.60, it will gain downside momentum and head towards the 90 level which will be bullish for GBP/USD.

Yesterday, UK reported that Services PMI decreased from 51.4 in October to 47.6 in November compared to analyst consensus of 45.8. The report was better than expected as some businesses managed to adapt to lockdowns but it is clear that the services sector remained under heavy pressure.

In the U.S., Services PMI increased from 56.9 to 58.4 while analysts expected that it would grow to 57.7. It remains to be seen whether the U.S. services sector will remain that strong in December as the coronavirus situation continues to get worse.

Today, foreign exchange market traders will pay attention to any Brexit updates as UK and EU enter the final days of negotiations. The market continues to believe that the parties will be able to reach consensus on key issues like fisheries and level playing field which provides support to pound and euro.

Technical Analysis

GBP/USD managed to settle above the resistance at 1.3440 and made an attempt to settle above the next resistance level at 1.3485.

If GBP/USD gets above the recent highs near 1.3485, it will gain additional upside momentum and head towards the resistance at 1.3515. A move above this level will open the way to the test of the next resistance at 1.3550.

On the support side, the resistance level at 1.3440 will likely serve as the first support level for GBP/USD. A move below this level will push GBP/USD towards the next support at 1.3400.

In case GBP/USD declines below the support at 1.3400, it will head towards the next support at 1.3325. A successful test of the support at 1.3325 will open the way to the next support level at 1.3300.

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