GBP/USD Daily Forecast – Test Of Resistance At 1.3625

GBP/USD Video 31.12.20.

British Pound Moves Towards Yearly Highs

GBP/USD is currently trying to settle above yearly highs at 1.3625 while the U.S. dollar remains under significant pressure against a broad basket of currencies.

The U.S. Dollar Index has managed to settle below the support at 89.75 and is trying to develop additional downside momentum. Some support has emerged near 89.55, and it remains to be seen whether the U.S. dollar will be able to gain momentum in the last trading session of the year. If the U.S. Dollar Index settles below 89.55, it will move towards the support level at 89.40 which will be bullish for GBP/USD.

Yesterday, UK reported that Nationwide Housing Prices increased by 0.8% month-over-month in December. On a year-over-year basis, Nationwide Housing Prices grew by 7.3%. The UK housing market remains strong, supported by low interest rates.

In the U.S., the housing market has started to cool down as Pending Home Sales declined by 2.6% month-over-month in November after falling by 0.9% in October.

Today, foreign exchange market traders will remain focused on the U.S. stimulus story. While the Senate is not expected to vote on $2,000 stimulus checks this year, traders continue to bet on additional stimulus in 2021, putting pressure on safe haven assets like the U.S. dollar.

Technical Analysis

GBP/USD is currently testing the resistance level at 1.3625. RSI is in the moderate territory so there is plenty of room to gain additional momentum.

If GBP/USD manages to settle above 1.3625, it will head towards the next resistance level at 1.3665. A successful test of the resistance at 1.3665 will push GBP/USD towards the next resistance level which is located at 1.3710.

On the support side, a move below 1.3625 will open the way to the test of the support level at 1.3575. In case GBP/USD declines below this level, it will gain downside momentum and head towards the next support at 1.3540. If GBP/USD settles below this level, it will move towards the next support level at 1.3500.

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