British Pound Continues To Gain Ground Against U.S. Dollar
GBP/USD is currently trying to settle above the resistance at 1.3735 while U.S. dollar is moving lower against a broad basket of currencies.
The U.S. Dollar Index continues its attempts to settle below the support level at 94.75. In case the U.S. Dollar Index manages to settle below this level, it will move towards the next support level at 94.50 which will be bullish for GBP/USD.
Today, foreign exchange market traders will have a chance to take a look at the economic data from UK.
Analysts expect that UK GDP increased by 0.4% month-over-month in November after growing by 0.1% in October. On a year-over-year basis, GDP is projected to increase by 7.5%.
Traders will also focus on Industrial Production and Manufacturing Production reports for November. Industrial Production is expected to grow by 0.2% month-over-month. On a year-over-year basis, Industrial Production is projected to increase by 0.5%. Manufacturing Production is projected to increase by 0.2% on a month-over-month basis.
Traders should also monitor the developments in U.S. government bond markets as Treasury yields have started to move higher after the recent pullback. While the U.S. dollar remains under pressure against a broad basket of currencies, higher rates may ultimately provide enough support to the American currency.
GBP/USD is testing the resistance level at 1.3735. In case this test is successful, GBP/USD will move towards the next resistance level which is located at 1.3765. RSI is close to the extremely overbought territory, so the risk of a pullback is increasing.
In case GBP/USD manages to settle above the resistance at 1.3765, it will move towards the next resistance at 1.3800. A successful test of this level will open the way to the test of the resistance at 1.3830.
On the support side, the nearest support level for GBP/USD is located at 1.3700. If GBP/USD declines below this level, it will move towards the next support at 1.3665. A move below 1.3665 will push GBP/USD towards the support at 1.3635.
For a look at all of today’s economic events, check out our economic calendar.