GBP/USD Daily Forecast – U.S. Dollar Tries To Rebound After Yesterday’s Sell-Off
GBP/USD Video 29.09.20.
British Pound Pulls Back After Yesterday’s Upside Move
GBP/USD failed to settle above the 20 EMA at 1.2890 and pulled back towards 1.2850 as the U.S. dollar remained mostly flat against a broad basket of currencies.
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Yesterday, the U.S. Dollar Index failed to settle above the key resistance level at 94.65 and declined towards the support at 94.20. If the U.S. Dollar Index moves below this support level, GBP/USD will have a good chance to settle above the 20 EMA and continue its upside move.
Today, global markets will focus on the first presidential debate between Donald Trump and Joe Biden. At the same time, traders will wait for the final GDP Growth Rate reports for the second quarter which will be published on Wednesday.
UK second-quarter GDP is projected to decline by 20.4% while U.S. second-quarter GDP is expected to fall by 31.7%. Typically, final readings do not differ much from previous estimates but the current situation is very complex so surprises are possible.
Any rumors about the ongoing Brexit negotiations will also impact GBP/USD trading dynamics. Yesterday, early indications that UK and EU made a small step closer to a compromise provided significant support to GBP/USD.
Technical Analysis
GBP/USD made an attempt to settle above the 20 EMA at 1.2890 but failed to develop sufficient upside momentum. A move above the 20 EMA will signal that GBP/USD will try to establish a new upside trend so there is a lot of interest at this level.
In case GBP/USD manages to settle above the 20 EMA, it will gain upside momentum and head to the test of the 50 EMA at 1.2935. A move above the 50 EMA will open the way to the test of the next resistance level at 1.3000.
On the support side, the nearest material support level is located at 1.2780. No significant levels were formed between 1.2780 and the 20 EMA at 1.2890 so GBP/USD may quickly fall towards the nearest support level if negative catalysts emerge.
If GBP/USD settles below the support at 1.2780, it will decline towards the next support level at 1.2750.
For a look at all of today’s economic events, check out our economic calendar.