GBP/USD Daily Forecast – U.S. Dollar Moves Lower As Fed Stays Dovish

GBP/USD Video 29.04.21.

British Pound Gains Ground Against U.S. Dollar

GBP/USD is currently trying to settle above the resistance at 1.3950 while the U.S. dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at 90.70 and made an attempt to settle below the next support level at 90.50 but failed to develop sufficient downside momentum. In case the U.S. Dollar Index declines below 90.50, it will move towards 90.30 which will be bullish for GBP/USD.

Yesterday, the Fed left the interest rate unchanged and stated that it was not the time to talk about reducing stimulus. The Fed expects that inflation will move above the 2% level but is not worried about sustainable inflation growth. It remains concerned about the damage dealt to the job market and is ready to provide the necessary support.

The dovish Fed provided significant support to riskier currencies while the U.S. dollar found itself under pressure. In addition, President Biden’s new spending plan put more pressure on the American currency, although it remains to be seen whether Democrats will be able to realize their spending plans in their current form.

Technical Analysis

GBP/USD managed to settle above the resistance at 1.3920 and is trying to settle above the next resistance level at 1.3950. In case this attempt is successful, GBP/USD will head towards the resistance which is located at 1.3980.

A move above the resistance at 1.3980 will open the way to the test of the major resistance at 1.4000. If GBP/USD gets above 1.4000, it will head towards the next resistance level at 1.4020. A successful test of this level will open the way to the test of the resistance at 1.4050.

On the support side, the previous resistance at 1.3920 will serve as the first support level for GBP/USD. If GBP/USD settles below this level, it will move towards the support at 1.3900. A move below this level will push GBP/USD towards the support at the 20 EMA at 1.3875.

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