GBP/USD Daily Forecast – Support At 1.3400 In Sight

GBP/USD Video 07.12.20.

British Pound Is Losing Some Ground At The Start Of The Week

GBP/USD is currently trading near 1.3400 while traders wait for Brexit updates. Meanwhile, the U.S. dollar is gaining some ground against a broad basket of currencies after a major sell-off last week.

The U.S. Dollar Index failed to settle below 90.50 and is currently trying to get above 90.75. If this attempt is successful, the U.S. Dollar Index will head towards the 91 level which will be bearish for GBP/USD.

There were no substantial developments on the Brexit front over the weekend. Negotiations have stalled on issues like fisheries, level playing field and ways to solve future disputes.

EU and UK will continue to discuss the deal on Monday. At this point, foreign exchange market traders believe that EU and UK will be able to negotiate a compromise deal, and this view provided material support to GBP/USD and EUR/USD in recent weeks. A no-deal Brexit will likely put serious pressure on the British pound.

Today, UK will provide the latest data on the Halifax House Price Index for November which is expected to show growth of 7.1% on a year-over-year basis. Most likely, this report will have limited impact on GBP/USD as traders will remain focused on Brexit.

Technical Analysis

gbp usd december 7 2020


GBP/USD is moving towards the nearest support level at 1.3400. If GBP/USD manages to settle below 1.3400, it will gain downside momentum and head towards the next support at the 20 EMA at 1.3335.

There are no important levels between 1.3325 and 1.3400 so this move may be fast. In case GBP/USD declines below the 20 EMA, it will move towards the next support level at 1.3300.

On the upside, the nearest resistance level for GBP/USD is located at 1.3440. If GBP/USD settles above this level, it will head towards the next resistance at 1.3485.

A successful test of the resistance at 1.3485 will open the way to the next resistance at 1.3515. If GBP/USD gets above the resistance at 1.3515, it will continue its upside move and head towards the recent highs at 1.3540.

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