GBP/USD Daily Forecast – British Pound Pulls Back Ahead Of The Weekend

GBP/USD Video 22.01.21.

U.S. Dollar Gains Some Ground Against British Pound

GBP/USD did not manage to settle above the resistance at 1.3710 and pulled back while the U.S. dollar remained mostly flat against a broad basket of currencies.

Yesterday, the U.S. Dollar Index made an attempt to settle below the 90 level but failed to develop sufficient downside momentum. Currently, the U.S. Dollar Index is located near 90.15. In case the U.S. Dollar Index manages to get below 90, it will head towards the support at 89.75 which will be bullish for GBP/USD.

Today, foreign exchange market traders will focus on the economic data from UK. Analysts expect that Retail Sales increased by 1.2% month-over-month in December. On a year-over-year basis, Retail Sales are projected to grow by 4%.

Traders will also have a chance to take a look at flash UK PMI data for January. Manufacturing PMI is expected to decline from 57.5 in December to 54 in January while Services PMI is expected to decrease from 49.4 to 45. The services segment is expected to remain under significant pressure due to lockdown measures in the UK.

Technical Analysis

GBP/USD faced resistance near 1.3745 and pulled back below 1.3710. The nearest material support level for GBP/USD is located at 1.3665. In case GBP/USD manages to settle below this level, it will move towards the next support level at 1.3625.

A successful test of the support at 1.3625 will open the way to the test of the next support which is located at the 20 EMA at 1.3610.

On the upside, GBP/USD needs to get back above the resistance at 1.3170 in order to continue its upside move. The next resistance level has emerged at 1.3745. In case GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3785.

From a big picture point of view, GBP/USD continues to trend higher. RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

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

This article was originally posted on FX Empire

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