GBP/USD Daily Forecast – U.S. Dollar Tries To Rebound At The Start Of The Week

British Pound Is Moving Lower Against U.S. Dollar

GBP/USD is testing the support at the 20 EMA at 1.3860 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle back above the 20 EMA at 92.55. In case this attempt is successful, the U.S. Dollar Index will move towards the resistance at 92.80 which will be bearish for GBP/USD.

On Friday, U.S. reported that Consumer Sentiment decreased from 81.2 in July to 70.2 in August compared to analyst consensus of 81.2. This report was surprising as the recent economic data was positive, and it looks that consumers are concerned about the spread of the Delta variant of coronavirus.

The report put significant pressure on the U.S. dollar as traders speculated that the rapid decline of Consumer Sentiment will make Fed more cautious about cutting its asset purchase program.

Today, foreign exchange market traders will have a chance to take a look at NY Empire State Manufacturing Index which is projected to decline from 43 in July to 30 in August. It remains to be seen whether this report will have an impact on GBP/USD dynamics or traders will wait for job market data from UK and Retail Sales data from U.S. which will be released on Tuesday.

Technical Analysis

GBP/USD failed to settle above the 50 EMA at 1.3875 and is trying to settle back below the 20 EMA at 1.3860. In case this attempt is successful, GBP/USD will move towards the next support level at 1.3835.

If GBP/USD declines below the support at 1.3835, it will head towards the next support at 1.3800. A move below this level will open the way to the test of the support at 1.3780.

On the upside, GBP/USD needs to settle above the 20 EMA to have a chance to develop upside momentum in the near term. The next resistance level is located at the 50 EMA at 1.3875.

If GBP/USD settles above the 50 EMA, it will head towards the resistance at 1.3900. A successful test of this level will push GBP/USD towards the resistance at 1.3930.

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