GBP/USD Pulls Back At The Start Of The Week

Key Insights

• GBP/USD is moving lower as the U.S. dollar rebounds against a broad basket of currencies. 
• Today, traders will likely focus on the dynamics of Treasury markets. 
• A move below 1.3140 will push GBP/USD towards the support level at 1.3110.

U.S. Dollar Gains Ground Against British Pound

GBP/USD is moving towards the support level at 1.3140, while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 98.35. In case this test is successful, the U.S. Dollar Index will move towards the resistance at 98.70, which will be bearish for GBP/USD.

There are no important economic reports scheduled to be released today, so foreign exchange market traders will focus on general market sentiment and the dynamics of U.S. government bond markets. Treasury yields stay close to their recent highs, and the continuation of the current upside trend may provide additional support to the American currency.

Technical Analysis

GBP/USD is currently trying to get to the test of the nearest support level at 1.3140. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If GBP/USD declines below the support at 1.3140, it will move towards the next support level at 1.3110. A move below this level will open the way to the test of the support at 1.3080. In case GBP/USD manages to settle below the support at 1.3080, it will head toward the next support level, which is located at 1.3050.

On the upside, the previous support level at 1.3175 will serve as the first resistance level for GBP/USD. In case GBP/USD gets above the resistance at 1.3175, it will head towards the next resistance level, which is located at the 20 EMA at 1.3200.

A move above the resistance at the 20 EMA will push GBP/USD towards the resistance at 1.3230. If GBP/USD settles above this level, it will move towards the resistance at 1.3275.

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