GBP/USD Daily Forecast – Resistance At 1.3625 In Sight

GBP/USD Video 05.01.21.

British Pound Rebounds After Yesterday’s Sell-Off

GBP/USD is currently trying to get back above 1.3600 while the U.S. dollar is losing ground against a broad basket of currencies.

Yesterday, the U.S. Dollar Index received strong support near 89.40 and gained upside momentum. However, it failed to get above the resistance at the 90 level and is trying to settle below the support at 89.75. If the U.S. Dollar Index moves towards the support level at 89.40, GBP/USD will get additional support.

On Monday, UK reported that Manufacturing PMI increased from 55.6 in November to 57.5 in December. However, foreign exchange market traders focused on the decision of UK Prime Minister Boris Johnson to put England under a new lockdown.

The new, more infectious strain of coronavirus which emerged in Britain is spreading fast so Johnson had no choice. It remains to be seen whether the new lockdown will put any material longer-term pressure on the British pound despite its negative impact on the British economy.

Technical Analysis

GBP/USD received support near 1.3540 and is trying to settle back above 1.3600. The nearest resistance level for GBP/USD is located at 1.3625. In case GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3665.

A successful test of this level will open the way to the test of the next resistance which is located near the recent highs at 1.3710.

On the support side, the nearest support level for GBP/USD is located at 1.3575. If GBP/USD moves below this level, it will head towards the next support level at 1.3540. This support level has been recently tested and proved its strength.

In case GBP/USD gets below the support at 1.3540, it will move towards the next support level which is located at the 20 EMA at 1.3515. A move below the 20 EMA will present a significant problem for GBP/USD bulls as it will signal that the near-term upside momentum has come to an end.

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