GBP/USD Daily Forecast – Resistance At 1.3745 In Sight

GBP/USD Video 25.01.21.

British Pound Moves Higher At The Start Of The Week

GBP/USD managed to get above the resistance at 1.3710 and is moving towards the next resistance level at 1.3745 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index faced resistance at the 20 EMA at 90.30 and is moving towards the support at the 90 level. If the U.S. Dollar Index manages to settle below the support at 90, it will gain additional downside momentum and head towards the next support level at 89.75 which will be bullish for GBP/USD.

On Friday, UK reported that Manufacturing PMI declined from 57.5 in December to 52.9 in January while Services PMI decreased from 49.4 to 38.8. Numbers below 50 show contraction.

Meanwhile, Retail Sales grew by 0.3% month-over-month in December compared to the analyst consensus which called for growth of 1.2%.

The reports indicated that the country’s problems on the coronavirus front have put significant pressure on the services segment while the consumer activity has started to slow down.

There are no important economic reports scheduled to be released today in the U.S. and UK, so foreign exchange market traders will focus on coronavirus-related news and Biden’s stimulus plan.

Technical Analysis

GBP/USD gained upside momentum and is trying to get to the test of the resistance level at 1.3745. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3785. A move above the resistance at 1.3785 will push GBP/USD towards the next resistance at 1.3800.

It should be noted that GBP/USD has not visited this territory for several years so it remains to be seen whether previous levels will be relevant for today’s trading.

On the support side, a move  below 1.3710 will open the way to the test of the support at 1.3665. In case GBP/USD declines below the support at 1.3665, it will head towards the next support level at 1.3625. A successful test of the support at 1.3625 will open the way to the test of the next support level at 1.3575.

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