GBP/USD Daily Forecast – Test Of Support At 1.3920
GBP/USD Video 19.03.21.
U.S. Dollar Moves Higher Against British Pound
GBP/USD is currently trying to settle below the 20 EMA at 1.3920 while the U.S. dollar is mostly flat against a broad basket of currencies.
The U.S. Dollar Index received strong support at the 20 EMA at 91.40 and returned back to the previous trading range between the support at 91.75 and the resistance at 92. The resistance level at 92 has already been tested many times and proved its strength. In case the U.S. Dollar Index manages to settle above this level, it will head towards the next resistance at 92.25 which will be bearish for GBP/USD.
Yesterday, the Bank of England left the interest rate unchanged at 0.1% and maintained the current pace of asset purchases. The Bank noted that it was ready to provide additional support to the economy in case the outlook for inflation weakened, adding that it would not tighten monetary policy unless the 2% inflation target was sustainably achieved.
Today, UK reported that Consumer Confidence improved from -23 in February to -16 in March as robust mass vaccination program boosted consumer mood.
GBP/USD is currently testing the nearest support level at the 20 EMA at 1.3920. If this test is successful, GBP/USD will move towards the next support at 1.3865. 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 manages to settle below the support at 1.3865, it will head towards the next support at the 50 EMA at 1.3840. A move below the 50 EMA will open the way to the test of the support at 1.3800.
On the upside, GBP/USD needs to stay above the 20 EMA to have a chance to gain upside momentum in the near term. The next resistance level for GBP/USD is located at 1.3950. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3980. A move above the resistance at 1.3980 will push GBP/USD towards the resistance at 1.4000.
For a look at all of today’s economic events, check out our economic calendar.