GBP/USD Moves Higher As Rebound Continues

British Pound Gains Ground Against U.S. Dollar

GBP/USD is currently moving towards the resistance at 1.3465 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at 96.70 and is trying to settle below the next support level at 96.50. In case the U.S. Dollar Index declines below this level, it will head towards the next support at 96.25 which will be bullish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at the final reading of Manufacturing PMI report from UK. Analysts expect that UK Manufacturing PMI declined from 57.9 in December to 56.9 in January.

In the U.S., Manufacturing PMI is projected to decline from 57.7 in December to 55 in January. Meanwhile, ISM Manufacturing PMI report is projected to show that ISM Manufacturing PMI decreased from 58.7 to 57.5.

It should be noted that Treasury yields continue to pull back from recent highs, which is bearish for the U.S. dollar. While markets have started to prepare for aggressive rate hikes, it is not clear whether Fed is ready to raise rates at almost every meeting in 2022 as such moves may hurt markets and economy.

Technical Analysis

GBP/USD is currently trying to get to the test of the resistance at 1.3465. A move above this level will open the way to the test of the next resistance which is located at the 50 EMA at 1.3490.

If GBP/USD moves above the 50 EMA, it will get to the test of the 20 EMA at 1.3500. A successful test of the resistance at the 20 EMA will push GBP/USD towards the resistance at 1.3535.

On the support side, the previous resistance at 1.3435 will serve as the first support level for GBP/USD. In case GBP/USD declines below this level, it will move towards the next support at 1.3420. A move below the support at 1.3420 will push GBP/USD towards the support at 1.3390.

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