GBP/USD Daily Forecast – U.S. Dollar Moves Higher As Tapering Nears

British Pound Is Under Pressure Against U.S. Dollar

GBP/USD is currently trying to settle below the support at 1.3710 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance at the yearly highs near 93.40. In case the U.S. Dollar Index manages to settle above this level, it will gain additional upside momentum which will be bearish for GBP/USD.

Yesterday, foreign exchange market traders had chance to take a look at FOMC Minutes which indicated that Fed was ready to cut its asset purchase program in 2021. Fed officials have different views and the exact timing should be discussed during the next meeting, but markets have already started to react to the risks of tapering.

Today, traders will focus on Initial Jobless Claims and Continuing Jobless Claims reports from U.S. Analysts expect that Initial Jobless Claims report will show that 363,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are projected to decline from 2.87 million to 2.8 million.

Technical Analysis

GBP/USD declined below the support at 1.3745 and is testing the next support level at 1.3710. In case this test is successful, GBP/USD will get to the test of the next support level which is located at 1.3690.

A move below 1.3690 will open the way to the test of the support at 1.3665. If GBP/USD declines below this level, it will head towards the next support level at 1.3635. A successful test of the support at 1.3635 will push GBP/USD towards the support at 1.3600.

On the upside, the previous support level at 1.3745 will serve as the first resistance level for GBP/USD. In case GBP/USD manages to settle back above this level, it will head towards the resistance level which is located at 1.3780. A move above the resistance level at 1.3780 will open the way to the test of the next resistance at 1.3800.

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