GBP/USD Daily Forecast – British Pound Tries To Rebound After Yesterday’s Sell-Off

07 Oct 2020, 18:13 · Views 437

U.S. Dollar Is Under Some Pressure After Yesterday’s Big Move

GBP/USD is currently trying to settle back above 1.2900 while the U.S. dollar is losing some ground against a broad basket of currencies after yesterday’s upside move.

The key topic for the currency market is Trump’s decision to end stimulus talks with Democrats. Traders hoped for a new round of stimulus, but now the market will have to wait for November election before new stimulus talks would become possible.

Not surprisingly, traders sold riskier assets on the news. Yesterday, S&P 500 was down by 1.4% while the U.S. Dollar Index managed to get back above 93.50 and made an attempt to gain more upside momentum.

Currently, the U.S. Dollar Index is trying to settle above the nearest resistance level at the 50 EMA at 93.85. If this attempt is successful, the U.S. Dollar Index will head towards the next resistance level at 94.20 which will be bearish for GBP/USD.

In addition to the recent news about stimulus talks, traders will focus on FOMC Minutes from the last meeting which will be released later today. The market will search for any additional clues about Fed’s view on the current state of the economy and the timing of the potential increase of interest rates.

Technical Analysis

GBP/USD received support near 1.2870 and is trying to get back above 1.2900. The nearest significant resistance level for GBP/USD is located at the 50 EMA at 1.2930.

If GBP/USD manages to settle above this level, it will gain upside momentum and head towards the test of the major resistance level at 1.3000.

In recent weeks, GBP/USD made several attempts to settle above 1.3000, but these attempts yielded no results. In case GBP/USD moves above 1.3000, it will head towards the next resistance at 1.3110.

On the support side, the nearest support level has emerged at 1.2870. If GBP/USD manages to get below this level, it will continue its downside move and get to the test of the next support level at 1.2815.

A move below 1.2815 will open the way to the test of the next support level at 1.2780. #GBP/USD##FX#

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