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GBP/USD Daily Forecast – Test Of Resistance At 1.2780

Vladimir Zernov
·2-min read

GBP/USD Video 28.09.20.

British Pound Tries To Gain Upside Momentum At The Beginning Of The Week

GBP/USD is trying to settle above the resistance at 1.2780 as the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index did not manage to settle above the significant resistance level at 94.65 and pulled back closer to 94.50. There are no important economic reports scheduled to be released in the U.S. today, so the U.S. dollar will remain in the hands of market sentiment.

If demand for safe haven assets continues to increase due to fears about the second wave of coronavirus, the U.S. dollar may continue its upside move. In this case, the U.S. Dollar Index will get above the resistance at 94.65 and gain additional upside momentum which will be bearish for GBP/USD.

According to The Times, the British government wants to impose a social lockdown on the majority of northern Britain. London could be impacted by new measures.

It remains to be seen whether the possibility of a new lockdown is already priced in by GBP/USD traders. Stricter anti-virus measures will certainly hurt the rebound of the British economy, and Bank of England may return to the discussion of negative interest rates which will be bearish for the British pound.

Technical Analysis

GBP/USD managed to get above the resistance at 1.2750 and is trying to settle above the next resistance level at 1.2780.

If this attempt is successful, GBP/USD will gain additional upside momentum and head towards the resistance at the 20 EMA at 1.2880.

A move above the 20 EMA will open the way to the next resistance level at the 50 EMA at 1.2930.

On the support side, the nearest support for GBP/USD is located at 1.2750. A move below this level will signal that GBP/USD failed to gain sufficient upside momentum and is ready to return to the previous downside trend.

In this case, GBP/USD will head towards the test of the major support level at 1.2650. A move below the support at 1.2650 will lead to increased downside momentum, pushing GBP/USD towards the support at 1.2550.

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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