GBP/USD Daily Forecast – U.S. Dollar Tries To Move Higher Against British Pound

Another Test Of Support At 1.3885

GBP/USD continues its attempts to settle below the support at the 20 EMA at 1.3885 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the nearest support level at 92.15 but failed to develop sufficient downside momentum. The nearest resistance level for the U.S. Dollar Index is located at 92.40. In case the U.S. Dollar Index gets to the test of this level, GBP/USD will find itself under more pressure.

Today, foreign exchange market traders will focus on the inflation data from U.S. Inflation Rate is expected to grow by 0.5% month-over-month in June. On a year-over-year basis, Inflation Rate is projected to increase by 4.9%. Core Inflation Rate is expected to grow by 4%.

The key question is whether Inflation Rate will get above the 5% mark. The Fed has recently managed to calm markets, and most traders believe that inflation remains under control and current Inflation Rate is temporary. If Inflation Rate exceeds 5%, U.S. dollar may get more support as higher inflation may force Fed to raise rates sooner than expected.

Technical Analysis

The technical picture for GBP/USD has not changed much compared to the previous trading session. Currently, GBP/USD is trying to settle below the support at 1.3885. If this attempt is successful, GBP/USD will move towards the next support level at 1.3865.

A move below the support at 1.3865 will open the way to the test of the next support which is located at 1.3835. If GBP/USD manages to settle below this level, it will head towards the support at 1.3800.

On the upside, GBP/USD needs to settle above the resistance at 1.3900 to have a chance to develop upside momentum in the near term. The next resistance level is located at 1.3920. If GBP/USD settles above this level, it will head towards the resistance at the 50 EMA at 1.3940.

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