GBP/USD Daily Forecast – Support At 1.3880 Stays Strong

British Pound Gains Some Ground Against U.S. Dollar

GBP/USD continues its attempts to settle back above the resistance at 1.3900 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index failed to settle above the resistance at 92.15 and moved towards the support at the 92 level. A move below this level will push the U.S. Dollar Index towards the 50 EMA at 91.90 which will be bullish for GBP/USD.

Yesterday, UK reported that Manufacturing PMI declined from 63.9 in June to 60.4 in July, in line with the analyst consensus. In the U.S., Manufacturing PMI increased from 62.1 in June to 63.4 in July compared to analyst consensus of 63.1 as the country’s economy continued to grow at a fast pace.

Today, foreign exchange market traders will have a chance to take a look at Factory Orders data from U.S. Analysts expect that Factory Orders increased by 1% month-over-month in June after growing by 1.7% in May.

Technical Analysis

GBP/USD received support at the 50 EMA at 1.3880 and made an attempt to settle above the resistance at 1.3900. In case GBP/USD manages to settle above this level, it will move towards the next resistance which is located at 1.3920.

A move above the resistance at 1.3920 will push GBP/USD towards the resistance at 1.3950. A successful test of this level will open the way to the test of the next resistance at 1.3980. If GBP/USD settles above the resistance at 1.3980, it will head towards the next resistance level at 1.4000.

On the support side, GBP/USD needs to settle below the support at the 50 EMA at 1.3880 to have a chance to gain downside momentum in the near term. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

A move below the 50 EMA will push GBP/USD towards the support at 1.3865. In case GBP/USD declines below this level, it will move towards the support at the 20 EMA at 1.3850.

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