GBP/USD Pulls Back After Bullard’s Comments

British Pound Is Losing Ground Against U.S. Dollar

GBP/USD continues its attempts to settle below the support at 1.3530 while U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above the 20 EMA at 95.90 and is testing the 96 level. In case this test is successful, GBP/USD will head towards the next resistance at 96.25 which will be bearish for GBP/USD.

Yesterday, U.S. reported that Inflation Rate grew by 7.5% year-over-year in January while Core Inflation Rate increased by 6%. Meanwhile, Fed’s Bullard stated that he had become more hawkish due to high inflation and backed a full percentage point of rate hikes over the next three meetings.

The U.S. Dollar was losing ground against a broad basket of currencies, but Bullard’s comments provided significant support.

Today, foreign exchange market traders will focus on the economic data from UK. The fourth-quarter GDP Growth Rate report is expected to show that GDP increased by 1.1% quarter-over-quarter. On a year-over-year basis, GDP is projected to grow by 6.4%.

UK Industrial Production is projected to increase by 0.1% month-over-month in December while UK Manufacturing Production is also expected to grow by 0.1%.

Technical Analysis

GBP/USD is currently trying to settle below the 20 EMA at 1.3530. A move below this level will open the way to the test of the next support at the 50 EMA at 1.3510.

If GBP/USD declines below 1.3510, it will gain additional downside momentum and head towards the support level at 1.3490. A successful test of the support at 1.3490 will push GBP/USD towards the support at 1.3465.

On the upside, GBP/USD needs to stay above the 20 EMA to have a chance to get to the test of the nearest resistance level at 1.3550. If GBP/USD climbs back above this level, it will head towards the resistance at 1.3575. A move above the resistance at 1.3575 will push GBP/USD towards the resistance which is located at 1.3600.

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