GBP/USD Gains Ground At The Start Of The Week

U.S. Dollar Is Losing Ground Against British Pound

GBP/USD continues its attempts to settle above the resistance level at 1.3420 while U.S. dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get below the support level at 97. In case this attempt is successful, the U.S. Dollar Index will move towards the next support level at 96.70 which will be bullish for GBP/USD.

Today, foreign exchange market traders will focus on general market sentiment and the developments in U.S. government bond markets. The yield of 2-year Treasuries stays close to recent highs as bond traders remain worried about inflation and potential Fed’s moves.

The market looks ready to see more than 4 rate hikes in 2022, which is bullish for the U.S. dollar. However, it remains to be seen whether the Fed will be so aggressive as it may put too much pressure on markets and economy.

Technical Analysis

GBP/USD is testing the resistance level at 1.3420. In case this test is successful, GBP/USD will move towards the next resistance level which is located at 1.3435. RSI is in the moderate territory, so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

A move above the resistance at 1.3435 will open the way to the test of the next resistance at 1.3465. If GBP/USD manages to settle above 1.3465, it will head towards the next resistance level at 1.3490.

On the support side, GBP/USD needs to settle below the support at 1.3390 to have a chance to gain downside momentum in the near term. The next support level for GBP/USD is located at 1.3365.

In case GBP/USD declines below the support at 1.3365, it will head towards the next support level at 1.3335.  A move below this level will open the way to the test of the next support at 1.3310.

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