GBP/USD Daily Forecast – British Pound Remains Under Pressure After Recent Sell-Off

GBP/USD

British Pound Continues To Move Lower Against U.S. Dollar

GBP/USD settled below the 50 EMA at 1.3840 and is trying to get to the test of the next support level at 1.3800 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the resistance which is located at the 20 EMA at 91.35. If this test is succesful, the U.S. Dollar Index will head towards the 50 EMA at 91.50 which will be bearish for GBP/USD.

Today, foreign exchange market traders will have a chance to take a look at the final reading of U.S. Manufacturing PMI report for April. Analysts expect that Manufacturing PMI increased from 59.1 in March to 60.6 in April. Construction Spending is projected to grow by 2% month-over-month in March after declining by 2% in February.

Traders will also keep an eye on the developments in the U.S. government bond markets. Treasury yields lack direction at the beginning of the week, but the continuation of the previous upside move may provide additional support to the American currency.

Technical Analysis

GBP/USD is currently moving towards the support level at 1.3800. RSI remains in the moderate territory after the recent sell-off, and there is plenty of room to gain additional downside momentum.

In case GBP/USD manages to settle below the support at 1.3800, it will head towards the next support level at 1.3785. A successful test of this level will open the way to the test of the support at 1.3745. In case GBP/USD declines below the support at 1.3745, it will head towards the support at 1.3710.

On the upside, the previous support at the 50 EMA at 1.3840 will serve as the first resistance level for GBP/USD. If GBP/USD manages to settle above this level, it will head towards the next resistance which is located at the 20 EMA at 1.3855. A successful test of the resistance at 1.3855 will push GBP/USD towards the next resistance at 1.3900 although it may also face some resistance near 1.3865.