GBP/USD Daily Forecast – Test Of Support At 1.3885

British Pound Pulls Back At The Start Of The Week

GBP/USD is currently trying to settle below the support at the 20 EMA at 1.3885 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle below the support level at 92.15 and is trying to develop upside momentum. In case this attempt is successful, the U.S. Dollar Index will move towards the resistance level at 92.40 which will be bearish for GBP/USD.

There are no important economic reports scheduled to be released in the U.S. and UK today so foreign exchange market traders will focus on general market sentiment and dynamics of U.S. government bonds.

Treasury yields have been recently moving lower, and the yield of 30-year Treasuries managed to get below the 2.00% level. Lower yields have put some pressure on the American currency in recent trading sessions.

If Treasury yields continue to move lower, the U.S. dollar may find itself under more pressure, although it remains to be seen whether this pressure will be significant as it looks that traders’ appetite for safe-haven assets is growing.

Technical Analysis

GBP/USD failed to settle above the resistance at 1.3900 and pulled back towards the support level which is located at the 20 EMA at 1.3885. In case GBP/USD manages to settle below this level, it will head towards the next support at 1.3865.

A successful test of the support at 1.3865 will open the way to the test of the support at 1.3835. In case GBP/USD declines below this level, it will move towards the next support level at 1.3800.

On the upside, the nearest resistance level for GBP/USD is located at 1.3900. If GBP/USD gets above this level, it will move towards the next resistance level at 1.3920. In case GBP/USD manages to settle above the resistance at 1.3920, it will head towards the resistance level which is located at the 50 EMA near 1.3945.

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