GBP/USD Daily Forecast – Traders Remain Focused On Brexit News
GBP/USD Video 08.12.20.
British Pound Is Flat After Yesterday’s Volatile Session
GBP/USD has managed to settle above 1.3350 after a very volatile trading session on Monday while the U.S. dollar is mostly flat against a broad basket of currencies.
Yesterday, the U.S. Dollar Index made an attempt to settle above the resistance at the 91 level but failed to develop sufficient upside momentum. Currently, the U.S. Dollar Index is located near 90.80 while foreign exchange market traders wait for additional catalysts. If the U.S. Dollar Index gets above 91, it will gain upside momentum and head towards 91.50 which will be bearish for GBP/USD.
There are no important economic reports scheduled to be released in the U.S. and UK today so GBP/USD traders will mostly focus on Brexit news.
According to recent reports, negotiations between EU and UK have stalled. British Prime Minister Boris Johnson and President of the European Commission Ursula von der Leyen will hold talks in an attempt to reach a compromise deal.
If this attempt is unsuccessful, GBP/USD will likely find itself under significant pressure. As indicated by yesterday’s trading action, EUR/USD will also move lower in this scenario.
GBP/USD is currently trying to settle above 1.3350. Volatility decreased, and GBP/USD may soon try to get to the test of the nearest resistance level at 1.3400.
If this test is successful, GBP/USD will head towards the next resistance level at 1.3440. This resistance was tested yesterday and proved its strength. In case GBP/USD manages to settle above the resistance at 1.3440, it will gain upside momentum and head towards the next resistance level at 1.3485.
On the support side, the nearest support for GBP/USD is located at the 20 EMA at 1.3330. If GBP/USD declines below this level, it will head towards the next support level at 1.3300. A move below the support at 1.3300 will push GBP/USD towards the next support at 1.3270.
I’d note that these support levels will likely be in play in case of relatively calm trading. Most likely, they will be ignored in case of a news-driven sell-off.
For a look at all of today’s economic events, check out our economic calendar.