GBP/USD Daily Forecast – Test Of Resistance At 1.2945

GBP/USD Video 19.10.20.

British Pound Starts The Week On A Strong Note

GBP/USD is testing the nearest resistance level at the 50 EMA at 1.2945 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index remains stuck in a tight range between the support at the 20 EMA at 93.60 and the resistance at the 50 EMA at 93.75. Currently, the U.S. Dollar Index is located closer to the high end of this range.

If the U.S. Dollar Index manages to settle above the 50 EMA at 93.75, it will gain upside momentum and head towards the 94 level which will be bearish for GBP/USD. A move below the 20 EMA will push the U.S. Dollar Index below 93.50 which will be bullish for GBP/USD.

There are no important economic reports scheduled to be released in the UK and U.S. today. In absence of economic news, traders will focus on Brexit negotiations and the fate of U.S. coronavirus aid package.

While UK and EU have intensified their preparations for a no-deal Brexit, negotiations continue. The currency market does not believe in a Brexit without a deal, and EUR/USD is flat at the start of the week while GBP/USD is gaining some ground.

However, the situation may change quickly, and traders should be prepared for a volatile week.

Technical Analysis

GBP/USD is currently trying to settle above the nearest resistance level at the 50 EMA at 1.2945. If this attempt is successful, GBP/USD will gain additional upside momentum and head towards the significant resistance level at 1.3000.

A move above the resistance at 1.3000 will open the way to the test of the next resistance near the recent highs at 1.3070. In case GBP/USD moves above the resistance at 1.3070, it will gain upside momentum and head towards the resistance at 1.3110.

On the support side, GBP/USD will likely get some support near 1.2890.  A move below this support level will open the way to the test of the next support level at 1.2815. If GBP/USD settles below 1.2815, it will continue its downside move and decline towards the support at 1.2780.

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