GBP/USD Daily Forecast – Test Of Resistance At The 50 EMA

08 Oct 2020, 20:06 · Views 497

British Pound Tries To Gain More Upside Momentum Against U.S. Dollar

GBP/USD is trying to get above the nearest resistance level at the 50 EMA at 1.2930 as the U.S. dollar is under some pressure against a broad basket of currencies.

Currently, the U.S. Dollar Index is heading towards 93.50. In case the U.S. Dollar Index manages to settle below this level, it will move towards the recent lows at 93.35 which will be bullish for GBP/USD.

The market is still focused on stimulus news from the U.S. While any comprehensive stimulus program will be implemented after election, traders believe that Republicans and Democrats may be able to reach consensus on certain stimulus items, like funds for airlines, before November.

However, expectations of new stimulus do not put too much pressure on the safe-haven U.S. dollar.

Today, U.S. will provide Initial Jobless Claims and Continuing Jobless Claims reports which will likely have a material impact on U.S. dollar’s trading dynamics.

Initial Jobless Claims are expected to decrease from 837,000 to 820,000 while Continuing Jobless Claims are projected to drop from 11.77 million to 11.4 million. The pace of the job market recovery may have a major impact on traders’ mood.

Technical Analysis

GBP/USD is testing the nearest resistance level at the 50 EMA at 1.2930. If this test is successful, GBP/USD will gain upside momentum and head towards the next resistance level at 1.3000.

This resistance level has been tested several times and proved its strength. A move above 1.3000 will signal that GBP/USD will try to make a serious upside move.

In this case, GBP/USD will head towards the next resistance level at 1.3110.

On the support side, the nearest support level is located at 1.2815. GBP/USD received support at some minor levels in the range between 1.2815 and 1.2935 but none of these levels was strong.

If GBP/USD manages to settle below 1.2815, it will head towards the next support at 1.2780. A move below the support at 1.2780 will lead to a test of the major support level at 1.2750. #GBP/USD##FX#

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