GBP/USD Daily Forecast – U.S. Dollar Pulls Back After Strong Move

British Pound Tries To Rebound Against U.S. Dollar

GBP/USD is currently trying to settle back above the resistance at the 50 EMA at  1.3885 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the resistance level at 92.80 but failed to develop sufficient upside momentum and pulled back. If the U.S. Dollar Index manages to settle above 92.80, it will head towards the resistance at 93.10 which will be bearish for GBP/USD.

On Friday, Non Farm Payrolls report indicated that U.S. economy added 943,000 jobs in July compared to analyst consensus of 870,000. The report provided strong support to U.S. dollar as traders bet that Fed would have to cut its asset purchase program sooner than expected.

Treasury yields moved higher, and the yield of 10-year Treasuries made an attempt to settle above 1.30%. Today, foreign exchange market trades will remain focused on the U.S. government bond markets. If the yield of 10-year Treasuries manages to settle above the 1.30% level, it will gain additional upside momentum which will provide more support to U.S. dollar.

Technical Analysis

GBP/USD is testing the resistance level at the 50 EMA at 1.3885. RSI is in the moderate territory, and there is enough room to gain additional upside momentum in case the right catalysts emerge.

If GBP/USD manages to settle above the 50 EMA, it will get to the test of the next resistance level at 1.3900. A successful test of this level will open the way to the test of the resistance which has recently emerged at 1.3930. In case GBP/USD gets above 1.3930, it will head towards the resistance at 1.3950.

On the support side, the nearest support level for GBP/USD is located at the 20 EMA at 1.3865. If GBP/USD declines below the 20 EMA, it will head towards the next support at 1.3835. A move below this level will open the way to the test of the support at 1.3800.

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