GBP/USD Tests Support At 1.3635

U.S. Dollar Gains Ground Against British Pound

GBP/USD is currently trying to settle below the support level at 1.3635 while U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 95.40. In case this test is successful, the U.S. Dollar Index will gain additional upside momentum and move towards the 50 EMA at 95.55 which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on the economic data from UK. Analysts expect that Claimant Count Change report will show that the number of people claiming unemployment benefits declined by 36,000 in December. UK Unemployment Rate is projected to remain unchanged at 4.2% in November.

Traders will also continue to monitor the developments in U.S. government bond markets. The yield of 2-year Treasuries managed to get above 1.00% and moved towards 1.05%. This move provided additional support to the American currency.

It should be noted that the currency market has mostly ignored the recent increase in Treasury yields, but a move above the psychologically important 1.00% level for shorter-term bonds may provide a material boost to the U.S. dollar.

Technical Analysis

GBP/USD is testing the support level at 1.3635. In case this test is successful, GBP/USD will move towards the next support which is located at 1.3600.

A successful test of the support at 1.3600 will open the way to the test of the next support at the 20 EMA at 1.3575. If GBP/USD declines below this level, it will head towards the support at 1.3535.

On the upside, the nearest resistance level for GBP/USD is located at 1.3665. In case GBP/USD manages to settle back above this level, it will gain additional upside momentum and move towards the next resistance at 1.3700. A move above the resistance level at 1.3700 will open the way to the test of the resistance which is located near the recent highs at 1.3735.

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