GBP/USD Daily Forecast – Support At 1.3540 Stays Strong

GBP/USD Video 08.01.21.

British Pound Is Mostly Flat Against U.S. Dollar

GBP/USD is mostly flat while the U.S. dollar is trying to gain more ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the 90 level but failed to develop sufficient upside momentum. If the U.S. Dollar Index manages to settle above this level, it will head towards the next resistance level which is located at the 20 EMA at 90.15.

Today, foreign exchange market traders will focus on the job market news from the U.S. The Non Farm Payrolls report is projected to show that the U.S. economy added 71,000 jobs in December.

Analysts estimates have declined after the release of the disappointing ADP Employment Change report which indicated that private businesses fired 123,000 workers in December. However, analysts estimates for Non Farm Payrolls remain in the positive territory.

Meanwhile, the sell-off in the bond market continues, and the yield on the U.S. 10-year government bond has reached 1.10%. Just a few days ago, 10-year bonds yielded less than 1.00%. The recent developments in the bond market had little impact on the U.S. dollar but the situation may change quickly if yields move even higher.

Technical Analysis

GBP/USD made another attempt to settle below the nearest support level at the 20 EMA at 1.3540 but failed to develop sufficient downside momentum. If GBP/USD declines below the 20 EMA, it will head towards the next support at 1.3500.

A successful test of the support at 1.3500 will push GBP/USD towards the next support at 1.3485. A move below this level will open the way to the test of the support at 1.3450.

On the upside, the nearest resistance level for GBP/USD is located at 1.3575. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3625. This resistance level has been tested several times during recent trading sessions and proved its strength. In case GBP/USD gets above the resistance at 1.3625, it will move towards the resistance at 1.3665.

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