GBP/USD Daily Forecast – U.S. Dollar Moves Higher After Yesterday’s Sell-Off

British Pound Is Losing Ground Against U.S. Dollar

GBP/USD is currently trying to settle below the support at 1.3900 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 92. In case this test is successful, the U.S. Dollar Index will move towards 92.15 which will be bearish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at U.S. Existing Home Sales data for May. Analysts expect that Existing Home Sales declined by 1% month-over-month in May after decreasing by 2.7% in April.

Later, traders’ focus will shift to Fed Chair Jerome Powell testimony. The market will pay close attention to Powell’s commentary after the recent hawkish Fed meeting.

Most likely, Powell will try to calm markets and promise to support the economy as long as necessary, but any words about rising inflation or potential rate hikes in the future could send waves across markets.

Technical Analysis

GBP/USD is currently testing the support level at 1.3900. In case this test is successful, GBP/USD will move towards the next support level which is located at 1.3865. RSI is in the moderate territory, and there is enough room to develop additional downside momentum.

If GBP/USD manages to settle below 1.3865, it will head towards the next support at 1.3835. In case GBP/USD declines below the support at 1.3835, it will move towards the support which is located at the recent lows at 1.3800.

On the upside, GBP/USD needs to stay above the resistance at 1.3900 to have a chance to develop upside momentum in the near term. If GBP/USD settles above this level, it will head towards the resistance at 1.3920.

A move above the resistance at 1.3920 will open the way to the test of the resistance at 1.3950. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3980.