GBP/USD Daily Forecast – British Pound Stays Strong At The Start Of The Week

British Pound Moves Higher Against U.S. Dollar

GBP/USD is currently trying to settle above the resistance at 1.3575 while U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle below the support level at 95.75 and rebounded towards the resistance at 96. In case the U.S. Dollar Index climbs back above this level, it will gain additional upside momentum and head towards the resistance level at 96.25 which will be bearish for GBP/USD.

There are no important economic reports scheduled to be released in the U.S. and UK today, so foreign exchange market traders will focus on general market sentiment and the dynamics of U.S. government bond markets.

Treasury yields continue to move higher as traders bet that Fed will raise rates in March. In addition, the bond market is worried that Fed may also start to reduce the size of its balance sheet. In this environment, they yield of 10-year Treasuries has already moved above 2021 highs and is trying to settle above 1.80%.

Interestingly, higher yields failed to provide a boost to U.S. dollar at the beginning of this year, but the situation may change quickly in case yields continue to rise.

Technical Analysis

GBP/USD is currently testing the resistance level at 1.3575. In case this test is successful, GBP/USD will move towards the next resistance level which is located at 1.3610.

A move above the resistance at 1.3610 will open the way to the test of the next resistance at 1.3635. In case GBP/USD moves above this level, it will head towards the resistance at 1.3665. A successful test of this level will push GBP/USD towards the resistance at 1.3700.

On the support side, a move below 1.3575 will push GBP/USD towards the support level at 1.3550. If GBP/USD manages to settle back below this level, it will get to the test of the next support level which is located at 1.3535.

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