GBP/USD Rebounds After Yesterday’s Massive Sell-Off

Key Insights

• GBP/USD gains ground as demand for riskier assets increases
• Traders will likely pay attention to Consumer Confidence reports from UK and U.S. 
• The war in Ukraine will remain the key driver for markets 

British Pound Moves Higher Against U.S. Dollar

GBP/USD is currently trying to settle back above 1.3420 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at the 97 level and is trying to develop additional downside momentum. In case this attempt is successful, the U.S. Dollar Index will head towards the support at 96.70, which will be bullish for GBP/USD.

Today, foreign exchange market traders had a chance to take a look at Gfk Consumer Confidence report from UK. The report indicated that Consumer Confidence declined from -19 in January to -26 in February, compared to analyst consensus of -18.

Traders will also focus on the final reading of Michigan Consumer Sentiment report from the U.S. Analysts expect that Consumer Sentiment improved from 61.7 in January to 67.2 in February.

While economic reports may have an impact on currency dynamics, the market will stay focused on the developments in the conflict between Russia and Ukraine.

Technical Analysis

GBP/USD is currently testing the resistance level at 1.3420. In case this test is successful, GBP/USD will move towards the next resistance at 1.3450.

A move above the resistance at 1.3450 will lead to the test of the resistance level at 1.3465. If GBP/USD manages to settle above this level, it will continue its rebound and head towards the resistance at 1.3490.

On the support side, the previous resistance level at 1.3390 will serve as the first support level for GBP/USD. If GBP/USD gets back below this level, it will move towards the next support at 1.3365. A successful test of the support at 1.3365 will push GBP/USD towards the next support level at 1.3335.

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