GBP/USD Daily Forecast – Support At 1.3835 In Sight

GBP/USD Video 18.02.21.

British Pound Is Losing Ground Against U.S. Dollar

GBP/USD remains under pressure while the U.S. dollar is mostly flat against a broad basket of currencies.

Yesterday, the U.S. Dollar Index managed to settle above the resistance at 90.90 and made an attempt to settle above the next resistance level at 91.10 but failed to develop sufficient upside momentum. Today, the U.S. Dollar Index is stuck in the range between 90.90 and 91. If the U.S. Dollar Index declines below 90.90, it will head towards the next support level at the 50 EMA at 90.80 which will be bullish for GBP/USD.

On Wednesday, U.S. reported that Retail Sales increased by 5.3% month-over-month in January compared to analyst consensus which called for growth of just 1.1%. The report highlighted the rebound of consumer activity and provided support to the U.S. dollar.

In the UK, Inflation Rate decreased by 0.2% month-over-month in January compared to analyst consensus which called for a decline of 0.4%. On a year-over-year basis, Inflation Rate increased by 0.7% compared to analyst consensus of 0.6%. Menawhile, Core Inflation Rate grew by 1.4% year-over-year.

While UK inflation reports exceeded analyst expectations, they did not have much impact on British pound dynamics as foreign exchange market traders remained focused on economic data from the U.S.

Technical Analysis

GBP/USD has managed to settle below the support level at 1.3875 and is trying to get to the test of the next support which is located at 1.3835. This support level has already been tested during yesterday’s trading session and proved its strength.

If GBP/USD declines below the support at 1.3835, it will head towards the next support level at 1.3800. A successful test of the support at 1.3800 will open the way to the test of the support at the 20 EMA at 1.3785.

On the upside, the previous support at 1.3875 will serve as the first resistance level for GBP/USD. A move above this level will open the way to the test of the next resistance at 1.3900. In case GBP/USD manages to settle above 1.3900, it will head towards the resistance at 1.3915.

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