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

GBP/USD Video 10.03.21.

British Pound Pulls Back Against U.S. Dollar

GBP/USD is currently trying to settle below the support at 1.3865 while the U.S. dollar is moving higher against a broad basket of currencies.

Yesterday, the U.S. Dollar Index made an attempt to settle below the 92 level as Treasury yields pulled back from highs. However, the U.S. Dollar Index did not manage to develop sufficient downside momentum and received strong support near 92. Currently, the U.S. Dollar Index is trying to get back above the resistance at 92.25. In case this attempt is successful, the U.S. Dollar Index will head towards the next resistance level at 92.50 which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on inflation data from the U.S. Analysts expect that Inflation Rate increased by 0.4% month-over-month in February. On a year-over-year basis, Inflation Rate is projected to grow by 1.7%. Meanwhile, Core Inflation Rate is expected to stay unchanged at 1.4%.

The market will pay close attention to U.S. inflation data as fears of higher inflation have recently pushed Treasury yields higher and provided support to the American currency. If inflation starts to pick up, Treasury yields may gain even more ground which will be bullish for the U.S. dollar.

Technical Analysis

GBP/USD failed to settle above the resistance at the 20 EMA at 1.3895 and is testing the support at 1.3865. In case this test is successful, GBP/USD will move towards the next support level at 1.3835.

A move below the support at 1.3835 will push GBP/USD towards the support at the 50 EMA at 1.3800. In case GBP/USD declines below this support level, it will get to the test of the next support level at 1.3780.

On the upside, GBP/USD must stay above 1.3865 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at the 20 EMA at 1.3895. If GBP/USD manages to settle above this level, it will move towards the next resistance level which is located at the recent highs at 1.3925.

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