GBP/USD Daily Forecast – Support At 1.2650 In SightGBP/USD managed to get below the support at 1.2750 and continues its downside move.
GBP/USD Video 23.09.20.
British Pound Continues To Lose Ground
GBP/USD continues to trend down as the U.S. dollar is gaining ground against a broad basket of currencies.
The U.S. Dollar Index managed to get above the 50 EMA at 93.85 and is trying to gain additional upside momentum above the 94 level. The next material resistance level for the U.S. Dollar Index is located at 94.65. If the U.S. Dollar Index moves towards this level, GBP/USD will find itself under additional pressure.
The British pound continues to suffer from coronavirus-related uncertainty in the UK. Yesterday, UK Prime Minister Boris Johnson encouraged people to work from home and ordered bars and restaurants to close early.
The market fears that these moves were just the first steps on the way to a real lockdown so traders continued to sell the pound.
Today, the UK will provide flash readings of Manufacturing PMI and Services PMI reports for September. Manufacturing PMI is projected to decrease from 55.2 in August to 54.1 in September while Services PMI is expected to decline from 58.8 to 56.
If the UK PMI numbers are weaker than expected, GBP/USD may fall closer to the next significant support level at 1.2650.
GBP/USD gained significant downside momentum and managed to settle below the support level at 1.2750. Currently, GBP/USD is heading towards the next material support at 1.2650.
If GBP/USD gets below the support at 1.2650, it will move towards the next support at 1.2550. A move below 1.2650 will be a very important development for GBP/USD as it will signal that GBP/USD may be ready to get back to its previous trading range between 1.2250 and 1.2650.
On the upside, the previous support at 1.2750 will likely serve as the first important resistance level for GBP/USD. A move above this level will open the way to the test of the next material resistance level at 1.2880. If GBP/USD gets above 1.2880, it will head towards the 50 EMA at 1.2940.
I’d note that GBP/USD has mostly ignored weaker levels in recent trading sessions so traders should focus on strong levels that have proved their strength.
For a look at all of today’s economic events, check out our economic calendar.