Sterling comes under serious pressure at the start of the week
GBP / USD is currently trying to move below 1.3350 as the US Dollar gains ground against a large basket of currencies.
The US dollar index has managed to break through resistance at 90.15 and is attempting to settle above the next resistance level at 90.50. If this attempt is successful, the US Dollar index will head to the next major resistance level at 20 EMA at 91 which will be bearish for GBP / USD.
The pound sterling has come under serious pressure after the discovery of a new COVID-19 strain in Britain. This strain is believed to be more contagious and many European countries have already closed their borders to British travelers.
Meanwhile, the UK and the EU failed to reach consensus on the Brexit deal over the weekend, but will continue negotiations on Monday. Fishing and a level playing field are the main obstacles on the way to a deal, and negotiators have failed to find compromises on these issues for many months.
Today, forex traders will also be awaiting the results of the U.S. stimulus vote as Republicans and Democrats managed to find a compromise over the weekend.
Technical analysis
GBP / USD has managed to break below 20 EMA at 1.3380 and is attempting to stabilize below 1.3350. If this attempt is successful, GBP / USD will head to the next support level near 1.3320.
A move below 1.3320 will push GBP / USD towards the support at 1.3300. If the GBP / USD drops below 1.3300, it will test for the next support level at 20 EMA at 1.3280. A successful test of this level will pave the way for testing the next support at 1.3250.
On the upside, the closest resistance level for GBP / USD is at 20 EMA at 1.3380. If the GBP / USD manages to move above the 20 EMA, it will head to the next resistance at 1.3400.
A successful test of this level will push GBP / USD towards resistance at 1.3440. In the event that GBP / USD moves above 1.3440, it will move to the next resistance level at 1.3485.
For an overview of all of today’s economic events, check out our economic calendar.
