GBP/USD Daily Forecast – Support At 1.3535 In Sight

British Pound Is Mostly Flat Against U.S. Dollar

GBP/USD managed to settle below 1.3575 and is slowly moving towards the support level at 1.3535 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index received support near the 20 EMA at 93.95 and moved back above the 94 level. In case the U.S. Dollar Index gets to the test of the nearest resistance level at 94.20, GBP/USD will find itself under more pressure.

There are no important economic reports scheduled to be released in the UK today so foreign exchange market traders will focus on inflation reports from U.S.

Analysts expect that U.S. Inflation Rate increased by 0.6% month-over-month in October. On a year-over-year basis, Inflation Rate is projected to grow by 5.8%. Core Inflation Rate is expected to increase by 4.3% year-over-year.

The key question is whether inflation remains under control. In case inflation exceeds analyst expectations, the U.S. dollar will get more support as traders will rush to bet that the Fed will be forced to raise rates in 2022.

Technical Analysis

GBP/USD declined below the 1.3575 level and made an attempt to get to the test of the support at 1.3535. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If GBP/USD settles below 1.3535, it will head towards the next support level which is located at 1.3500. In case GBP/USD declines below this support level, it will head towards the support at 1.3470.

On the upside, the nearest resistance level for GBP/USD is located at 1.3575. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.3600.

A successful test of the resistance at 1.3600 will push GBP/USD towards the resistance at the 20 EMA at 1.3630. In case GBP/USD gets above 1.3630, it will move towards the next resistance level at 1.3665.

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