GBP/USD Daily Forecast – British Pound Gains Ground On Brexit Optimism

GBP/USD Video 23.12.20.

British Pound Moves Higher Against U.S. Dollar

GBP/USD is currently trying to get back above the resistance at 1.3400 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index faced resistance near 90.70 and pulled back below the nearest support level at 90.50. The next material support level for the U.S. Dollar Index is located at 90. If the U.S. Dollar Index gains downside momentum and heads towards 90, GBP/USD will get a boost.

Yesterday, UK reported that third-quarter GDP grew by 16% quarter-over-quarter compared to analyst estimates which called for growth of 15.5%. The final reading of the third-quarter U.S. GDP Growth Rate was also better than expected as GDP grew by 33.4% compared to analyst consensus which called for grwoth of 33.1%.

Today, foreign exchange market traders will focus on Brexit negotiations. EU negotiator Michel Barnier has recently stated that EU negotiators were giving a final push in order to reach a compromise deal.

At this point, fisheries are the main stumbling block on the way to the deal, but recent reports suggest that EU and UK have a chance to strike a deal before Christmas which will be bullish for the British pound.

Technical Analysis

GBP/USD is testing the nearest resistance level at 1.3400. In case GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3440.

RSI is in the moderate territory so there is plenty of room to gain upside momentum in case the right catalysts emerge. A move above the resistance at 1.3440 will push GBP/USD towards the resistance at 1.3485.

In case GBP/USD settles above 1.3485, it will head towards the next resistance at 1.3540, although it may also face some resistance at 1.3500. If GBP/USD gets above the resistance at 1.3540, it will move towards the next resistance level near 1.3575.

On the support side, a move below the support at 1.3400 will open the way to the test of the next support level at 1.3320. If GBP/USD declines below this level, it will get to the test of the next support which is located near the 50 EMA at 1.3300.

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