GBP/USD Tests Support At 1.2475

Key Insights

• The main event of the day is the Fed Interest Rate Decision, which will have a significant impact on currency dynamics. 
• Traders will also take a look at the ADP Employment Change report from the U.S. 
• A move below the support at 1.2475 will push GBP/USD towards the next support level at 1.2450.

British Pound Remains Under Pressure Ahead Of The Fed Interest Rate Decision

GBP/USD is currently trying to settle below the support at 1.2475, while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index is located near the resistance level at 103.60. This resistance level has already been tested several times in recent trading sessions and proved its strength. If the U.S. Dollar Index settles above 103.60, it will move towards the next resistance at 103.80, which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on the Fed Interest Rate Decision and the subsequent commentary from Fed Chair Powell. The rate is expected to be raised from 0.5% to 1.0%, and the key question is whether Powell’s commentary is hawkish enough to trigger another dollar rally.

Traders will also have a chance to take a look at the ADP Employment Change report from the U.S. Analysts expect that the report will show that private businesses added 395,000 jobs in April.

Technical Analysis

GBP/USD is testing the support level at 1.2475. In case this test is successful, GBP/USD will move towards the next support, which is located at 1.2450.

A move below the support at 1.2450 will open the way to the test of the next support level at 1.2415. If GBP/USD declines below this level, it will head towards the support at 1.2390.

On the upside, the nearest resistance level for GBP/USD is located at 1.2510. In case GBP/USD manages to settle back above this level, it will head towards the resistance at 1.2530.

A successful test of the resistance at 1.2530 will push GBP/USD towards the resistance at 1.2565. In case GBP/USD gets above this level, it will head towards the next resistance level at 1.2600.

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