GBP/USD Daily Forecast – British Pound Tries To Gain Ground After Sell-Off

U.S. Dollar Is Losing Ground Against British Pound

GBP/USD is trying to settle back above 1.3745 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index faced resistance near 93.10. If the U.S. Dollar Index settles above this level, it will gain additional upside momentum and head towards the next resistance at 93.40 which will be bearish for GBP/USD.

UK has just released inflation data for July. Inflation Rate remained unchanged on a month-over-month basis compared to analyst consensus which called for growth of 0.3%. On a year-over-year basis, Inflation Rate increased by 2% compared to analyst consensus of 2.3%. Core Inflation Rate grew by 1.8% year-over-year while analysts expected that it would grow by 2.2%.

Inflation reports may put more pressure on the British pound, but it remains to be seen whether the U.S. dollar will be able to gain additional upside momentum after yesterday’s strong move.

Meanwhile, Treasury yields are moving higher. The yield of 10-year Treasuries is trying to settle above the resistance at 1.28%. In case this attempt is successful, the yield of 10-year Treasuries will move towards the 1.30% level which may provide more support to the American currency.

Technical Analysis

GBP/USD is currently trying to rebound after yesterday’s sell-off. In order to have a chance to gain upside momentum in the near term, GBP/USD needs to settle above 1.3745.

If GBP/USD settles above this level, it will move towards the next resistance level at 1.3780. A successful test of the resistance at 1.3780 will push GBP/USD towards the resistance at 1.3800. A move above 1.3800 will open the way to the test of the resistance which is located at the 20 EMA at 1.3835.

On the support side, the nearest support level for GBP/USD is located at 1.3710. In case GBP/USD declines below this level, it will head towards the next support at 1.3690. A move below 1.3690 will push GBP/USD towards the next support which is located at 1.3665.

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