GBP/USD Daily Forecast – Test Of Support At 1.3900

GBP/USD Video 02.03.21.

British Pound Remains Under Pressure Against U.S. Dollar

GBP/USD is currently trying to settle below the support at 1.3900 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 91.10 and is moving towards the next resistance level which is located at 91.30. In case the U.S. Dollar Index settles above 91.30, it will head towards the resistance at 91.50 which will be bearish for GBP/USD.

Yesterday, UK reported that Manufacturing PMI increased from 54.1 in January to 55.1 in February compared to analyst consensus of 54.9. In the U.S. Manufacturing PMI declined from 59.2 to 58.6 compared to analyst consensus of 58.5. Numbers above 50 show expansion.

Today, foreign exchange market traders will have a chance to take a look at UK Nationwide Housing Prices data. Analysts expect that Nationwide Housing Prices declined by 0.3% month-over-month in February after falling by 0.3% in January. On a year-over-year basis, Nationwide Housing Prices are projected to grow by 5.6%.

Technical Analysis

GBP/USD is currently testing the nearest support level at 1.3900. RSI remains in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If GBP/USD settles below the support at 1.3900, it will head towards the next support level at 1.3865. This support level has been recently tested and proved its strength.

In case GBP/USD declines below the support at 1.3865, it will head towards the next support level at 1.3835. A move below this level will open the way to the test of the support at 1.3800.

On the upside, GBP/USD needs to get back above 1.3900 in order to have a chance to develop upside momentum in the near term. If GBP/USD settles above this level, it will move towards the next resistance at the 20 EMA at 1.3920. A move above this level will open the way to the test of the resistance at 1.3950. If GBP/USD settles above 1.3950, it will head towards the resistance at 1.3980.

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