GBP/USD Daily Forecast – Test Of Support At 1.2890GBP/USD is trying to gain additional downside momentum below the nearest support level.
GBP/USD Video 16.10.20.
British Pound Remains Under Pressure Amid Brexit Uncertainty And Second Wave In Europe
GBP/USD is trying to settle below 1.2900 as traders remain anxious about Brexit negotiations and the second wave of coronavirus in Europe.
Yesterday, the U.S. Dollar Index gained significant upside momentum. Currently, it is trying to settle above the resistance at the 50 EMA at 93.75. If the U.S. Dollar Index manages to gain additional momentum, it will head towards the 94 level which will be bearish for GBP/USD.
Brexit negotiations continue, and it looks like UK and EU are ready to negotiate for a few more weeks in order to reach a deal. It is still not clear whether they will be able to reach a compromise deal. This uncertainty puts some pressure on the British pound although the situation may change quickly in case negotiations make some progress.
Yesterday, U.S. reported that Initial Jobless Claims jumped to 898,000 while Continuing Jobless Claims declined to 10.02 million. Perhaps, the disappointing Initial Jobless Claims data could push Republicans and Democrats to intensify their stimulus negotiations. However, it may be hard to get any deal before the November election.
GBP/USD is currently testing the nearest support level at 1.2890. This support level has been tested several times during recent trading sessions and proved its strength.
In case GBP/USD manages to settle below the support at 1.2890, it will gain downside momentum and head towards the next support level at 1.2815. A move below the support at 1.2815 will push GBP/USD towards the support at 1.2780.
On the upside, GBP/USD needs to stay above 1.2900 to have a chance to develop upside momentum. The nearest significant resistance level for GBP/USD is located at the 50 EMA at 1.2945.
If GBP/USD moves above the 50 EMA, it will gain upside momentum and head towards the resistance 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.
I’d note that the trading action in recent trading sessions was news-driven so GBP/USD easily moved between levels. Most likely, this volatility will continue next week due to Brexit uncertainty and virus fears.
For a look at all of today’s economic events, check out our economic calendar.