GBP/USD is trying to settle above 1.2950 as the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index is currently attempting to settle below 93.50. If this attempt is successful, the U.S. Dollar Index will head towards recent lows at 93.35 which will be bullish for GBP/USD.
UK has just released several economic reports. Manufacturing Production decreased by 8.4% year-over-year in August compared to analyst consensus which called for a decline of 5.9%. On a month-over-month basis, Manufacturing Production gained just 0.7% compared to analyst consensus of 3%.
Industrial Production was also worse than expectations. In August, Industrial Production declined by 6.4% year-over-year compared to analyst consensus of -4.6%. Month-over-month, Industrial Production gained 0.3% while analysts expected that it would grow by 2.5%.
Construction Output declined by 13% year-over-year while analysts expected that it would drop by 8.8%.
These reports are very alarming as the shows that the pandemic continues to put significant pressure on the British economy. The economic data for August is weak, and we know that Britain introduced new anti-virus measures in September and October so a continued recovery of the British economy is now under question.
It remains to be seen whether this data will put pressure on the pound since traders are focused on U.S. stimulus talks and their potential impact on the general direction of the U.S. dollar.
GBP/USD continues its attempts to settle above 1.2950. If GBP/USD manages to get above this level, it will have a chance to get to the test of the major resistance at 1.3000.
In case GBP/USD settles above the resistance at 1.3000, it will gain upside momentum and head towards the next resistance level at 1.3110.
On the support side, the nearest support for GBP/USD is located at the 50 EMA at 1.2930. In addition, GBP/USD may get some support at the 50 EMA at 1.2915.
If GBP/USD manages to settle below the 50 EMA and the 20 EMA, it will gain downside momentum and head towards the next significant support level at 1.2815.
From a big picture point of view, GBP/USD continues its rebound but faces strong resistance at 1.3000. A move above this resistance level will signal that GBP/USD will try to make a major upside move. #GBP/USD##FX#
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