GBP/USD Daily Forecast – British Pound Continues To Pull Back

GBP/USD Video 26.02.21.

U.S. Dollar Gains Ground Against British Pound

GBP/USD continues to pull back from recent highs and is trying to settle below the support at 1.3950 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle above the resistance level at 90.30. If this attempt is successful, the U.S. Dollar Index will head towards the next resistance at 90.50 which will be bearish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at UK Nationwide Housing Prices data for February. Analysts expect that housing prices increased by 0.2% month-over-month. On a year-over-year basis, housing prices are projected to grow by 6.5%.

Later, market’s attention will shift to economic data from the U.S. Personal Income is projected to grow by 9.5% month-over-month in January while Personal Spending is expected to increase by 2.5%.  The reports will show how stimulus checks boosted consumer activity and may have a material impact on the trading dynamics of the American currency.

Technical Analysis

GBP/USD continues to move lower as traders take profits after the recent rally. The current pullback is so strong that RSI has already moved from the extremely overbought territory to normal levels.

Currently, GBP/USD is trying to settle below the support level at 1.3950. If this attempt is successful, GBP/USD will head towards the next support level which is located at the 20 EMA at 1.3920.

A move below the 20 EMA will open the way to the test of the support at 1.3900. If GBP/USD declines below this level, it will head towards the next support level at 1.3880.

On the upside, GBP/USD needs to get back above 1.3950 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at 1.3980. If GBP/USD settles above this level, it will move towards the resistance at 1.4000.

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