GBP/USD Rebounds After Yesterday’s Sell-Off

British Pound Gains Some Ground Against U.S. Dollar

GBP/USD is currently trying to settle back above 1.3400 while U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index faced resistance near 97.25 and pulled back. The nearest support level for the U.S. Dollar Index is located at 97. In case the U.S. Dollar Index declines below this level, it will move towards the next support at 96.70 which will be bullish for GBP/USD.

Today, foreign exchange market traders will stay focused on the economic data from U.S. Analysts expect that Personal Income increased by 0.5% month-over-month in December. Personal Spending is projected to decline by 0.6% month-over-month.

Traders will also have a chance to take a look at the final reading of Michigan Consumer Sentiment report for January. Analysts expect that Consumer Sentiment decreased from 70.6 in December to 68.7 in January.

Traders will continue to monitor the developments in U.S. government bond markets. The yield of 2-year Treasuries is currently trying to settle above the 1.20% level as bond traders bet on aggressive rate hikes from the Fed. In case shorter-term yields continue to increase, U.S. dollar may get more support.

Technical Analysis

GBP/USD is currently trying to get to the test of the nearest resistance level at 1.3420. In case GBP/USD settles above this level, it will move towards the next resistance at 1.3435.

A successful test of the resistance at 1.3435 will push GBP/USD towards the resistance at 1.3465. If GBP/USD gets above this level, it will move towards the next resistance level which is located at 1.3490.

On the support side, the nearest support level for GBP/USD is located at 1.3390. If GBP/USD declines below this support level, it will head towards the next support at the recent lows at 1.3365.

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

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