GBP/USD Daily Forecast – Test Of Resistance At 1.3780

British Pound Gains Ground At The Start Of The Week

GBP/USD is currently trying to settle above the resistance at 1.3780 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index settled below the 20 EMA at 92.80 and is moving towards the 50 EMA at 92.45. In case the U.S. Dollar Index gets to the test of the 50 EMA, GBP/USD will get more support.

Today, foreign exchange market traders will have a chance to take a look at U.S. Pending Home Sales report. Analysts expect that Pending Home Sales increased by 0.4% month-over-month in July after declining by 1.9% in June.

Traders will also keep an eye on the developments in U.S. government bond markets. The yield of 10-year Treasuries moved towards the 20 EMA near 1.30% after Fed Chair Jerome Powell reiterated his dovish message on Friday. Recent comments from Fed officials sounded hawkish, and markets have started to prepare for the reduction of Fed’s asset purchase program. However, Powell was dovish enough to calm traders’ fears.

Technical Analysis

GBP/USD managed to settle above the resistance at the 20 EMA at 1.3765 and is trying to settle above the next resistance at 1.3780. In case this attempt is successful, GBP/USD will head towards the next resistance level which is located at 1.3800.

A successful test of the resistance at 1.3800 will push GBP/USD towards the next resistance at the 50 EMA at 1.3815. If GBP/USD manages to settle above the resistance at the 50 EMA at 1.3815, it will move towards the next resistance at 1.3835.

On the support side, the previous resistance at the 20 EMA at 1.3765 will serve as the first support level for GBP/USD. In case GBP/USD declines below this support level, it will head towards the next support at 1.3745.

A move below 1.3745 will open the way to the test of the support at 1.3710. If GBP/USD settles below the support level at 1.3710, it will get to the test of the next support at 1.3690.

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