GBP/USD Tests Resistance At 1.3550

British Pound Moves Higher Against U.S. Dollar

GBP/USD is currently trying to settle above the resistance at 1.3550 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to get below the 96 level and is testing the 20 EMA at 95.90. In case this test is successful, the U.S. Dollar Index will move towards the 50 EMA at 95.80 which will be bullish for GBP/USD.

Today, foreign exchange market traders will focus on the inflation data from UK. Inflation Rate declined by 0.1% month-over-month in January compared to analyst consensus which called for a decline of 0.2%. On a year-over-year basis, Inflation Rate grew by 5.5% compared to analyst consensus of 5.4%. Core Inflation Rate increased by 4.4% month-over-month while analysts expected that it would grow by 4.3%.

Inflation exceeded analyst expectations, but the near-term trend is encouraging as it looks that inflation has finally started to cool down. At the same time, it remains to be seen whether the reports will have a material impact on GBP/USD dynamics as they were mostly in line with the analyst consensus.

Technical Analysis

GBP/USD managed to settle above the 20 EMA at 1.3540 and is testing the resistance level at 1.3550. In case this test is successful, GBP/USD will move towards the next resistance level which is located at 1.3575.

If GBP/USD manages to get above the resistance at 1.3575, it will head towards the resistance level at 1.3600. A successful test of this level will push GBP/USD towards the resistance at 1.3625.

On the support side, the previous resistance at the 20 EMA at 1.3540 will serve as the first support level for GBP/USD. In case GBP/USD declines below this level, it will head towards the next support at the 50 EMA near 1.3520. If GBP/USD gets below the 50 EMA, it will gain additional downside momentum and move towards the support level at 1.3490.

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