GBP/USD Tests Resistance At 1.3420

Key Insights

• Global risk appetite increases after the first round of negotiations between Russia and Ukraine.
• The U.S. dollar loses its momentum against a broad basket of currencies. 
• A move above 1.3420 will push GBP/USD towards the resistance at 1.3450.

British Pound Gains Ground Against U.S. Dollar

GBP/USD continues its attempts to settle above the resistance at 1.3420, while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is currently located near the support level at 96.70. If the U.S. Dollar Index declines below this level, it will move towards the next support at the 20 EMA at 96.50, which will be bullish for GBP/USD.

Today, foreign exchange market traders will stay focused on geopolitical developments, which are the key driver for global market sentiment. Yesterday, negotiations between Russia and Ukraine yielded no tangible results, but the countries agreed to continue talks.

Equity markets are moving higher today, and S&P 500 futures are up by more than 0.5% in premarket trading, which means that appetite for risk is increasing. If risk appetite stays strong, the British pound will get more support.

Technical Analysis

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

A move above the resistance at 1.3450 will open the way to the test of the next resistance at 1.3465. If GBP/USD gets above this level, it will move towards the resistance at the 20 EMA at 1.3500. In case GBP/USD manages to settle above the 20 EMA, it will head towards the next resistance level, which is located at the 50 EMA at 1.3510.

On the support side, a move below 1.3420 will push GBP/USD towards the support level at 1.3390. In case GBP/USD declines below this level, it will head towards the next support level at 1.3365. A successful test of this level will open the way to the test of the support at 1.3335.

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