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GBP/USD Daily Forecast – U.S. Dollar Starts The Week On A Strong Note

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GBP/USD Video 26.10.20.

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

GBP/USD is under some pressure at the start of the week as the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get to the test of the nearest resistance at the 93 level. In case the U.S. Dollar Index manages to settle above this level, it will gain additional upside momentum and head towards the 20 EMA at 93.25 which will be bearish for GBP/USD.

On Friday, UK reported that Manufacturing PMI decreased from 54.1 in September to 53.3 in October while Services PMI decreased from 56.1 to 52.3. Analysts expected that Services PMI would decline to 54.0 but virus-related restrictions put additional pressure on this segment.

In the U.S., Manufacturing PMI increased from 53.2 to 53.3 while Services PMI grew from 54.6 to 56.0 as the economy continued to rebound. However, it remains to be seen whether this rebound will be sustainable as U.S. lawmakers have so far failed to reach consensus on a new coronavirus aid package.

Technical Analysis

GBP/USD is currently trying to settle below the support level at 1.3030. In case this attempt is successful, GBP/USD will move towards the next support at 1.3000.

The 20 EMA is located at 1.2990, and GBP/USD is set to receive material support in the 1.2990 – 1.3000 area. If GBP/USD manages to settle below this support area, it will gain additional downside momentum and head towards the next support at the 50 EMA at 1.2965.

A move below the support at 1.2965 will push GBP/USD towards the support at 1.2890. There are no material levels between 1.2890 and 1.2965 so this move may be fast.

On the upside, GBP/USD needs to stay above 1.3030 to have a chance to develop upside momentum. If GBP/USD settles above this level, it will head towards the next resistance level which is located at 1.3070. In case GBP/USD manages to settle above the resistance at 1.3070, it will gain additional upside momentum and move towards the resistance at 1.3110.

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

This article was originally posted on FX Empire

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