GBP/USD Daily Forecast – U.S. Dollar Remains Under Pressure Against British Pound

British Pound Gains Some Ground Against U.S. Dollar

GBP/USD is currently trying to get back above 1.3780 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle above the resistance level at 94 and declined below 93.90. The nearest support level for the U.S. Dollar Index is located at the 20 EMA at 93.80. In case the U.S. Dollar Index manages to settle below the 20 EMA, it will gain downside momentum and move towards the support at 93.50 which will be bullish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at Durable Goods Orders report from U.S. Analysts expect that Durable Goods Orders declined by 1.1% month-over-month in September after growing by 1.8% in August.

Traders will also continue to monitor the developments in U.S. government bond markets. While the yield of 10-year Treasuries declined in recent trading sessions, the yield of 2-year Treasuries continues to rally as bond traders are worried about inflation and the reduction of Fed’s asset purchase program. It remains to be seen whether the rapid increase in the yield of shorter-term bonds will provide support to the American currency, but it’s a story to be watched closely.

Technical Analysis

GBP/USD is trying to get above the resistance level at 1.3780. If this attempt is successful, it will move towards the next resistance at 1.3800.

A successful test of the resistance at 1.3800 will push GBP/USD towards the significant resistance level at 1.3835. Yesterday, GBP/USD made an attempt to get above this level but faced strong resistance. If GBP/USD settles above the resistance at 1.3835, it will gain additional upside momentum and head towards the next resistance at 1.3875.

On the support side, the nearest support level for GBP/USD is located at 1.3745. In case GBP/USD declines below this level, it will move towards the 50 EMA which is located at 1.3720. A successful test of the support at the 50 EMA will lead to the test of the next support level at 1.3710.

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