GBP/USD Tests Support At 1.3050

Key Insights

• Hawkish comments from Fed’s Brainard provided significant support to the American currency.
• Treasury yields are testing new highs, which is bullish for the U.S. dollar.
• A move below 1.3050 will push GBP/USD towards the support at 1.3030.

British Pound Is Under Pressure Against U.S. Dollar

GBP/USD is currently trying to settle below the support at 1.3050, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the resistance at 99.45 and is testing the next resistance level at 99.75. In case this test is successful, the U.S. Dollar Index will head towards the 100 level, which will be bearish for GBP/USD.

Yesterday, U.S. dollar received strong support after hawkish comments from Fed’s Brainard, who said that the Fed would cut its balance sheet aggressively to curb inflation.

Not surprisingly, Treasury yields continued to move higher after such comments. The yield of 2-year Treasuries made an attempt to settle above 2.60%, while the yield of 10-year Treasuries tested the 2.63% level. In case Treasury yields continue to move higher, the American currency will get more support, and the U.S. Dollar Index will move above the psychologically important 100 level.

Technical Analysis

GBP/USD is testing the support level at 1.3050. In case this test is successful, GBP/USD will move towards the next support, which is located at 1.3030.

A successful test of the support at 1.3030 will open the way to the test of the next support at March lows at 1.3000. If GBP/USD declines below this level, it will move towards the next support at 1.2970.

On the upside, the previous support level at 1.3080 will serve as the first resistance level for GBP/USD. In case GBP/USD manages to settle back above this level, it will move towards the next resistance level at 1.3110. A successful test of the resistance at 1.3110 will push GBP/USD towards the resistance at 1.3140.

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