GBP/USD Daily Forecast – Test Of Support At 1.3500

GBP/USD Video 11.01.21.

U.S. Dollar Gains Ground Against British Pound At The Beginning Of The Week

GBP/USD is currently trying to settle below the support at 1.3500 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the resistance at the 20 EMA at 90.20 and gained upside momentum. Currently, it is trying to get to the test of the next material resistance level at 90.50. If the U.S. Dollar Index manages to settle above the resistance at 90.50, GBP/USD will find itself under additional pressure.

On Friday, the Non Farm Payrolls report showed that the U.S. economy lost 140,000 jobs in December. This report highlighted the need for additional stimulus. Interestingly, the U.S. dollar continues to rebound despite strong stimulus expectations, and it looks like rising yields on U.S. government bonds are providing some support to the American currency.

There are no important economic reports scheduled to be released in the U.S. and UK today so foreign exchange market traders will focus on the latest developments on the U.S. political front. Democrats want to push Trump out of office before his term ends due to the recent unrest in Washington, but it remains to be seen whether they have enough time to complete any moves.

Technical Analysis

GBP/USD is currently testing the nearest support level at 1.3500. RSI remains in the moderate territory so there is plenty of room to gain additional downside momentum.

The next support level for GBP/USD is located at 1.3485. If GBP/USD declines below this level, it will head towards the support at 1.3450. A move below 1.3450 will push GBP/USD towards the support at the 50 EMA at 1.3415.

On the upside, the nearest resistance level for GBP/USD is located at the 20 EMA at 1.3530. The next resistance level is located at 1.3540 so GBP/USD will likely face significant resistance in the 1.3530 – 1.3540 area.

In case GBP/USD settles above the resistance at 1.3540, it will gain upside momentum and head towards the resistance at 1.3575.

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