GBP/USD Tries To Rebound After Yesterday’s Sell-Off

British Pound Moves Higher Against U.S. Dollar

GBP/USD is currently trying to settle back above 1.3600 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index faced resistance near the 20 EMA at 95.70 and pulled back. The nearest support level for the U.S. Dollar Index is located at the 50 EMA at 95.60. In case the U.S. Dollar Index manages to settle below this level, it will move towards the next support at 95.40 which will be bullish for GBP/USD.

Today, foreign exchange market traders will focus on economic data from UK. Analysts expect that UK Inflation Rate increased by 0.3% month-over-month in December. On a year-over-year basis, UK Inflation Rate is expected to increase by 5.2%. UK Core Inflation Rate is projected to grow by 3.9% year-over-year. The currency market will be sensitive to inflation data as yields have already started to move higher.

Traders will also take a look at UK Retail Price Index data for December. Retail Price Index is projected to grow by 0.7% month-over-month. On a year-over-year basis, Retail Price Index is expected to increase by 7.1%.

Technical Analysis

GBP/USD failed to settle below the support level at the 20 EMA at 1.3575 and is currently trying to settle back above 1.3600. In case this attempt is successful, GBP/USD will move towards the next resistance level at 1.3635.

A successful test of the resistance at 1.3635 will push GBP/USD towards the next resistance at 1.3665. If GBP/USD manages to settle above this level, it will head towards the resistance at 1.3700.

On the support side, a move below 1.3600 will push GBP/USD back towards the support at the 20 EMA at 1.3575. If GBP/USD manages to settle below this level, it will head towards the next support level at 1.3535. A successful test of the support at 1.3535 will open the way to the test of the support which is located at the 50 EMA at 1.3500.

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