GBP/USD Daily Forecast – Test Of Support At 1.3875

GBP/USD Video 17.02.21.

British Pound Pulls Back

GBP/USD is currently trying to settle below the support at 1.3875 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the resistance at the 20 EMA at 90.60 and is trying to settle above the next resistance level which is located at the 50 EMA at 90.75. If this attempt is successful, the U.S. Dollar Index will head towards the next resistance level at 90.90 which will be bearish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at the latest inflation data from the UK. Analysts expect that UK Inflation Rate declined by 0.4% month-over-month in January as virus containment measures put pressure on prices. On a year-over-year basis, Inflation Rate is projected to grow by 0.6%. Meanwhile, Core Inflation Rate is expected to increase by 1.3%.

Later, traders’ attention will shift to U.S. Retail Sales report which is projected to show that Retail Sales increased by 1.1% month-over-month in January. Traders will also keep a close eye on the latest developments in the U.S. bond market as the rapid increase in Treasury yields provides support to the American currency.

Technical Analysis

GBP/USD declined below the support at 1.3900 and is testing the next support level at 1.3875. If this test is successful, GBP/USD will gain additional downside momentum and head towards the next support level at 1.3835.

In case GBP/USD declines below the support at 1.3835, it will continue its downside move and head towards the support at 1.3800.

On the upside, the previous support at 1.3900 will serve as the first support level for GBP/USD. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3915.

A move above the resistance at 1.3915 will open the way to the test of the next resistance at 1.3935. In case GBP/USD settles above this level, it will head towards the resistance which is located at the recent highs at 1.3950.

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