GBP/USD Daily Forecast – Test Of Support At 1.3310

British Pound Pulls Back After Yesterday’s Rally

GBP/USD is moving towards the support level at 1.3310 while U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index continues its attempts to settle below the support level at 96. In case the U.S. Dollar Index manages to settle below this level, it will move towards the next support at 95.75 which will be bullish for GBP/USD.

Yesterday, the Bank of England changed the interest rate from 0.1% to 0.25% while analysts expected that the rate would remain unchanged at 0.1%. The surprising rate hike provided significant support to British pound.

Today, foreign exchange market traders had a chance to take a look at Retail Sales data from UK. Retail Sales increased by 1.4% month-over-month in November compared to analyst consensus which called for an increase of 0.8%. On a year-over-year basis, Retail Sales grew by 4.7% compared to analyst consensus of 4.2%.

It remains to be seen whether strong Retail Sales data will provide additional support to British pound as the market is mostly focused on the trajectory of potential rate hikes from the world’s central banks.

Technical Analysis

GBP/USD is currently trying to settle back below the support at 1.3310. In case this attempt is successful, it will move towards the support at the 20 EMA at 1.3295.

If GBP/USD settles below the 20 EMA, it will head towards the support level at 1.3280. A move below this level will push GBP/USD towards the support at 1.3250.

On the upside, the nearest resistance level for GBP/USD is located at 1.3350. RSI remains in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If GBP/USD manages to settle above the resistance at 1.3350, it will head towards the next resistance level at 1.3370. A successful test of this level will open the way to the test of the resistance which is located near the 50 EMA at 1.3400.

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