GBP/USD Daily Forecast – U.S. Dollar Tries To Move Higher Ahead Of Inflation Data

GBP/USD Video 10.06.21.

British Pound Is Mostly Flat Against U.S. Dollar

GBP/USD is currently trying to settle below the support at 1.4100 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 20 EMA at 90.20. In case this test is successful, the U.S. Dollar Index will head towards the next material resistance level at 90.50 which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on U.S. inflation data. Analysts expect that Inflation Rate increased by 4.7% year-over-year in May. On a month-over-month basis, Inflation Rate is projected to increase by 0.4%. Core Inflation Rate is expected to grow by 3.4% year-over-year.

These inflation reports are the main event of the week for the American currency. Treasury yields have recently moved lower, indicating that bond traders were ready to ignore inflation risks.

However, the situation may change quickly if the reports show that U.S. Inflation Rate moved above the 5% level in May. In this case, the Fed may be forced to cut its support sooner than expected, which will be bullish for the U.S. dollar and bearish for riskier assets.

Technical Analysis

GBP/USD managed to settle below the 20 EMA at 1.4135 and is testing the support at 1.4100. In case this test is successful, GBP/USD will move towards the next support level at 1.4080.

A move below the support at 1.4080 will open the way to the test of the next support level which is located at the 50 EMA at 1.4055. In case GBP/USD declines below the 50 EMA, it will head towards the support at 1.4020.

On the upside, the previous support at the 20 EMA at 1.4135 will serve as the first resistance level for GBP/USD. If GBP/USD gets above this level, it will move towards the next resistance at 1.4150. A successful test of the resistance at 1.4150 will push GBP/USD towards the resistance level which is located at 1.4180.

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