GBP/USD Daily Forecast – U.S. Dollar Gains Some Ground Against British Pound
GBP/USD Video 22.12.20.
British Pound Is Moving Lower
GBP/USD is currently trying to settle below the support at 1.3400 while the U.S. dollar is gaining ground against a broad basket of currencies.
Yesterday, the American currency was very volatile on the foreign exchange market, and the U.S. Dollar Index tested both the resistance at the 91 level and the support at the 90 level. Currently, the U.S. Dollar Index is moving towards the nearest resistance level at 90.50. If the U.S. Dollar Index settles above this level, it will move towards the 91 level which will be bearish for GBP/USD.
British pound will likely remain very volatile this week as traders wait for the outcome of Brexit negotiations and follow the latest developments on the virus front.
On Monday, UK Prime Minister Boris Johnson stated that problems in Brexit negotiations still existed and that Britain was ready to leave the EU without a deal.
Meanwhile, Britain and France are working on an agreement that will allow them to reopen border on Tuesday but maintain some control over the new virus strain which emerged in UK.
Today, UK will provide the final reading of the third-quarter GDP Growth Rate. The report is projected to show that GDP increased by 15.5% quarter-over-quarter after falling by 19.8% in the second quarter.
GBP/USD is testing the support at 1.3400. The 20 EMA is in the nearby so GBP/USD may get material support at this level.
If GBP/USD manages to settle below the 20 EMA, it will gain downside momentum and head towards the next support level at 1.3320. There are no important levels between 1.3320 and 1.3400 so this move may be fast.
In case GBP/USD settles below the support at 1.3320, it will get to the test of the next support level at 1.3300. A move below this level will open the way to the support at the 50 EMA at 1.3285.
On the upside, GBP/USD needs to stay above 1.3400 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at 1.3440. A move above this level will push GBP/USD towards the resistance at 1.3485.
Most likely, GBP/USD will remain highly volatile in the upcoming trading sessions so traders should be prepared for fast moves.
For a look at all of today’s economic events, check out our economic calendar.