GBP/USD Daily Forecast – British Pound Continues To Move Higher

GBP/USD Video 13.01.21.

U.S. Dollar Is Under Pressure

GBP/USD is currently trying to settle above the resistance at 1.3665 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index gained downside momentum and is testing the support level at 90. If this test is successful, the U.S. Dollar Index will move towards the next support at 89.75 which will be bullish for GBP/USD.

Today, foreign exchange market traders will focus on inflation data from the U.S. Analysts expect that Inflation Rate increased by 1.3% year-over-year in December. On a month-over-month basis, Inflation Rate is projected to grow by 0.4%. Meanwhile, Core Inflation Rate is projected to increase by 1.6% year-over-year.

Inflation reports are especially interesting in the light of the recent increase in U.S. Treasury yields which provided some support to the American currency. However, the yield of 10-year Treasuries has recently declined from 1.18% to 1.12%, and the U.S. dollar found itself under pressure. If yields continue to pull back, the U.S. Dollar Index will likely move closer to yearly lows at 89.21, and GBP/USD will get a boost.

Technical Analysis

GBP/USD is testing the nearest resistance level at 1.3665. If this test is successful, GBP/USD will move towards the next resistance which is located near January highs at 1.3710. RSI remains in the moderate territory so there is plenty of room to gain additional momentum in case the right catalysts emerge.

If GBP/USD settles above the resistance at 1.3710, it will head towards the next resistance level at 1.3755. A move above this level will open the way to the test of the resistance at 1.3785.

On the support side, a move below 1.3665 will push GBP/USD towards the support at 1.3625. No important levels were formed between 1.3625 and 1.3665 so this move may be fast.

In case GBP/USD declines below the support level at 1.3625, it will head towards the next support level at 1.3575. If GBP/USD settles below this level, it will get to the test of the next support level which is located at the 20 EMA at 1.3560.

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