GBP/USD Daily Forecast – British Pound Pulls Back Ahead Of BoE Interest Rate Decision

GBP/USD Video 18.03.21.

British Pound Is Losing Some Ground Against U.S. Dollar

GBP/USD is currently trying to settle below the support at 1.3950 while the U.S. dollar is mostly flat against a broad basket of currencies.

Yesterday, the U.S. Dollar Index managed to move below the support at 91.75 and tested the next support level at 91.50 after dovish comments from Fed Chair Jerome Powell. Powell stated that the economic recovery was very strong and that inflation will pick up but the Fed was ready to tolerate higher inflation.

Interestingly, the U.S. dollar found itself under pressure despite rising Treasury yields. Currently, the yield of 10-year Treasuries is trying to settle above 1.66% while the yield of 30-year Treasuries is testing the 2.44% level.

Meanwhile, the U.S. Dollar Index found support at the 20 EMA at 91.35 and is trying to get back above 91.50. If this attempt is successful, the U.S. Dollar Index will head towards the resistance at 91.75 which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on the Bank of England Interest Rate Decision. The interest rate is expected to stay unchanged at 0.1%, and the market will focus on the Bank’s commentary which may have a material impact on GBP/USD dynamics.

Technical Analysis

GBP/USD faced resistance near 1.3980 and is trying to settle back below 1.3950. If this attempt is successful, GBP/USD will move towards the next support level which is located at the 20 EMA at 1.3920.

A move below the 20 EMA will open the way to the test of the support at 1.3865. No material levels were formed between 1.3865 and 1.3920 so this move may be fast.

On the upside, GBP/USD needs to stay above 1.3950 to continue its rebound. The nearest resistance level for GBP/USD is located at 1.3980. In case GBP/USD manages to settle above this level, it will head towards the next resistance at 1.4000. A move above the resistance at 1.4000 will push GBP/USD towards the resistance at 1.4025.

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