GBP/USD Daily Forecast – Test Of Support At 1.3420

U.S. Dollar Gains Some Ground Against British Pound

GBP/USD is curently trying to settle below the support at 1.3420 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance at 96.25. If this test is successful, the U.S. Dollar Index will have a good chance to gain upside momentum and get to the test of the next resistance level at 96.50 which will be bearish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at Pending Home Sales data from U.S. Analysts expect that Pending Home Sales increased by 0.5% month-over-month in November after growing by 7.5% in October. On a year-over-year basis, Pending Home Sales are projected to decline by 6.4%.

Traders will also continue to monitor the developments in U.S. government bond markets. The yield of 2-year Treasuries has recently faced resistance at yearly highs at 0.7560% and pulled back towards 0.74%. In case the yield of 2-year Treasuries manages to settle above 0.7560%, it will gain additional upside momentum which may provide more support to the American currency.

Technical Analysis

GBP/USD declined below the support level at 1.3440 and is trying to settle below the next support at 1.3420. In case this attempt is successful, GBP/USD will move towards the support level which is located at 1.3400.

A move below the support at 1.3400 will push GBP/USD towards the next support level at the 50 EMA at 1.3390. In case GBP/USD manages to settle below the 50 EMA, it will gain additional downside momentum and head towards the next support at 1.3370.

On the upside, the previous support level at 1.3440 will serve as the first resistance level for GBP/USD. In case GBP/USD manages to settle back above this level, it will move towards the resistance which is located near the recent highs at 1.3460. A successful test of this level will open the way to the test of the resistance at 1.3500.

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