GBP/USD Daily Forecast – British Pound Gains Ground Ahead Of Fed Decision

U.S. Dollar Is Moving Lower Against British Pound

GBP/USD is currently trying to settle back above 1.3635 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is stuck in the range between the support at 94 and the resistance at 94.20. In case the U.S. Dollar Index declines below the 94 level, it will move towards the support at the 20 EMA at 93.85 which will be bullish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at the final reading of Services PMI report from UK. The report is expected to show that Services PMI increased from 55.4 in September to 58 in October.

UK Nationwide Housing Prices report is projected to indicate that housing prices increased by 0.4% month-over-month in October. On a year-over-year basis, Nationwide Housing Prices are expected to grow by 9.3%.

It remains to be seen whether these reports will have an impact on GBP/USD dynamics as traders will be waiting for Fed Interest Rate Decision and the subsequent commentary. Today, the Fed is expected to announce the reduction of its asset purchase program. The key question is whether Fed will show that it is more worried about inflation. If the Fed starts tapering but sticks to its previous dovish stance, the U.S. dollar may find itself under pressure.

Technical Analysis

GBP/USD failed to settle below the support level at 1.3600 and is currently trying to get back above the resistance at 1.3635. In case this attempt is successful, GBP/USD will move towards the next resistance at 1.3665.

A move above 1.3665 will push GBP/USD towards the resistance at 1.3690. If GBP/USD gets above this level, it will move towards the resistance which is located at the 50 EMA at 1.3710.

On the support side, a move below 1.3600 will open the way to the test of the support at 1.3575. If GBP/USD manages to settle below this level, it will head towards the next support level at 1.3535.

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