GBP/USD Daily Forecast – Brexit Uncertainty Puts Pressure On British Pound

GBP/USD Video 10.12.20.

British Pound Remains Very Volatile As Traders Wait For The Outcome Of Brexit Negotiations

GBP/USD failed to settle above 1.3400 and moved closer to 1.3350 while the U.S. dollar remained mostly flat against a broad basket of currencies on the foreign exchange market.

The U.S. Dollar Index continues its attempts to settle above the nearest resistance level at 91. If the U.S. Dollar Index manages to settle above this level, it will gain upside momentum and move closer to the next resistance at 91.50 which will be bearish for GBP/USD.

Yesterday, British Prime Minister Boris Johnson and President of the European Commission Ursula von der Leyen gave Brexit negotiators time until the end of the week to reach a compromise deal.

At this point, EU and UK remain far apart on key issues like fisheries and level playing field, although the market continues to believe that they will be able to reach consensus.

Today, UK will release Industrial Production and Manufacturing Production reports for October. Analysts expect that Industrial Production decreased by 6.5% year-over-year. On a month-over-month basis, Industrial Production is projected to grow by 0.3%. Meanwhile, Manufacturing Production is projected to decline by 8.4% year-over-year.

Technical Analysis

GBP/USD remains very volatile but the technical picture has barely changed in recent trading sessions. GBP/USD needs to settle above the resistance at 1.3400 to have a chance to develop upside momentum.

In case GBP/USD gets above 1.3400, it will head towards the next resistance level at 1.3440. A successful test of the resistance at 1.3440 will push GBP/USD towards the next resistance at 1.3485. GBP/USD made an attempt to get above 1.3485 during yesterday’s trading session but faced strong resistance near this level.

On the support side, the nearest support for GBP/USD is located at the 20 EMA at 1.3335. If GBP/USD settles below this level, it will move towards the next support at 1.3300. A move below the support at 1.3300 will open the way to the test of the next support level at 1.3270.

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