GBP/USD Daily Forecast – Test Of Support At 1.3860

U.S. Dollar Tries To Gain Ground Against British Pound

GBP/USD is trying to settle below the support at the 20 EMA at 1.3860 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index settled below the 93 level and is trying to get to the test of the nearest support level at 92.80. In case the U.S. Dollar Index declines below this level, it will gain downside momentum and head towards the support at the 20 EMA at 92.55 which will be bullish for GBP/USD.

UK has recently released preliminary GDP Growth Rate report for the second quarter. The report indicated that GDP increased by 4.8% quarter-over-quarter, in line with the analyst consensus. On a year-over-year basis, GDP grew by 22.2%.

Foreign exchange market traders also had a chance to take a look at UK Industrial Production and Manufacturing Production reports for June. Industrial Production declined by 0.7% month-over-month while analysts expected that it would grow by 0.3%. Manufacturing Production grew by 0.2% month-over-month compared to analyst consensus of 0.4%.

Technical Analysis

GBP/USD failed to settle above the resistance at the 50 EMA at 1.3880 and is trying to settle below the support at the 20 EMA at 1.3860. In case GBP/USD manages to settle back below the 20 EMA, it will gain downside momentum and head towards the next support level which is located at 1.3835.

A move below the support at 1.3835 will open the way to the test of the next support at 1.3800. If GBP/USD declines below 1.3800, it will head towards the support at 1.3780.

On the upside, GBP/USD needs to settle above the resistance at the 50 EMA at 1.3880 to have a chance to develop additional upside momentum in the near term. RSI is in the moderate territory, and there is plenty of room to develop upside momentum in case the right catalysts emerge.

A successful test of the resistance at 1.3880 will push GBP/USD towards the next resistance at 1.3900. If GBP/USD moves above this level, it will head towards the resistance at 1.3920.

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