GBP/USD Video 18.12.20.
British Pound Pulls Back Ahead Of The Weekend
GBP/USD pulled back from recent highs and is trying to settle below 1.3540 while the U.S. dollar rebounds against a broad basket of currencies.
Yesterday, the U.S. Dollar Index managed to get below the psychologically important 90 level but found support near 89.75. Currently, is trying to get back above the 90 level. If this attempt is successful, the U.S. Dollar Index may get some upside momentum which will be bearish for GBP/USD.
British pound found itself under pressure after UK Prime Minister Boris Johnson stated that the time was running out and that it looked likely that agreement between EU and UK would not be reached. If Britain leaves the EU without a deal, GBP/USD will move lower.
On Thursday, the Bank of England left the interest rate unchanged, in line with analyst expectations. The size of the quantitative easing program was also left unchanged as the Bank of England abstained from any major moves amid Brexit uncertainty.
Today, foreign exchange market traders will focus on UK Retail Sales data for November. Retail Sales are projected to decline by 4.2% month-over-month in November due to the negative impact of lockdowns. On a year-over-year basis, Retail Sales are projected to grow by 2.8%.
GBP/USD is testing the nearest support level at 1.3540. If GBP/USD manages to settle below this level, it will head towards the next support at 1.3500.
A successful test of the support at 1.3500 will push GBP/USD towards the next support level at 1.3485. In case GBP/USD declines below the support level at 1.3485, it will gain additional downside momentum and head towards the support at 1.3440. I’d note that GBP/USD may easily move between these levels if traders get disappointing news on Brexit.
On the upside, GBP/USD needs to stay above 1.3540 in order to have a chance to develop upside momentum in the near term. Some resistance has emerged at 1.3575. If GBP/USD settles above this level, it will head towards recent highs at 1.3625.
For a look at all of today’s economic events, check out our economic calendar.