All Eyes On Brexit Negotiations
GBP/USD is trying to get to the test of the nearest resistance level at 1.3400 while the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index failed to settle above the resistance at the 91 level and declined closer to 90.70. The nearest support level for the U.S. Dollar Index is located at 90.50. If the U.S. Dollar Index gets to the test of this level, GBP/USD will get additional support.
There are no important economic reports scheduled to be released in the U.S. and UK today so foreign exchange market traders will focus on Brexit drama.
Negotiations between EU and UK have stalled in recent days, and it looks like chances of a no-deal scenario are increasing. Today, British Prime Minister Boris Johnson will travel to Brussels to talk with the President of the European Commission Ursula von der Leyen. Many observers view these negotiations as the last chance to negotiate a compromise deal.
Interestingly, the market remains optimistic. British pound suffered several sell-offs in recent days, but each sell-off was quickly bought by traders who were willing to bet on a successful outcome of Brexit negotiations. Most likely, the pound will remain highly volatile for the rest of the week.
GBP/USD is moving towards 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.
If GBP/USD gets above 1.3440, it will gain additional upside momentum and move towards the resistance at 1.3485.
On the support side, the nearest support level for GBP/USD is located at the 20 EMA at 1.3335. A successful test of this level will push GBP/USD towards the next support at 1.3300. This support level was tested yesterday and proved its strength.
It should be noted that GBP/USD will remain highly sensitive to Brexit news and may easily ignore all technical levels in case of a strong news-driven move.
For a look at all of today’s economic events, check out our economic calendar.