GBP/USD Daily Forecast – British Pound Is Mostly Flat After UK Inflation Reports
Resistance At 1.3800 Stays Strong
GBP/USD continues its attempts to settle above 1.3800 while the U.S. dollar is mostly flat against a broad basket of currencies.
Yesterday, U.S. Dollar Index received support near 93.50 and rebounded towards 93.75. Currently, the U.S. Dollar Index is trying to settle back below 93.75. In case this attempt is successful, the U.S. Dollar Index will head towards the support level near the 50 EMA at 93.40 which will be bullish for GBP/USD.
Today, foreign exchange market traders had a chance to take a look at inflation data from UK. Inflation Rate increased by 0.3% month-over-month in September compared to analyst consensus of 0.4%. On a year-over-year basis, Inflation Rate grew by 3.1% while analysts expected that it would increase by 3.2%. Core Inflation Rate grew by 2.9% year-over-year compared to analyst consensus of 3%.
Meanwhile, Retail Price Index grew by 0.4% month-over-month in September while analysts expected that it would grow by just 0.2%. On a year-over-year basis, Retail Price Index increased by 4.9%.
The data is a bit bearish for the British pound as Inflation Rate and Core Inflation Rate grew at a slower pace than expected, but it remains to be seen whether it will have a significant impact on GBP/USD dynamics.
GBP/USD has recently made another attempt to settle above the resistance at 1.3800 but lost momentum and pulled back.
In case GBP/USD manages to settle above this level, it will head towards the next resistance level which is located at 1.3835. A successful test of this level will open the way to the test of the resistance at 1.3875.
On the support side, the nearest support level for GBP/USD is located at 1.3780. If GBP/USD declines below 1.3780, it will move towards the next support level at 1.3745.
A move below 1.3745 will push GBP/USD towards the support which is located near the 50 EMA at 1.3710. In case GBP/USD gets below the 50 EMA, it will move towards the next support at 1.3690.
For a look at all of today’s economic events, check out our economic calendar.