GBP/USD Daily Forecast – Test Of Resistance At 1.4150

GBP/USD

British Pound Gains Ground Against U.S. Dollar

GBP/USD is currently trying to settle back above the resistance at 1.4150 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is once again testing the support level at 90. This support level has already been tested many times in recent trading sessions so the U.S. Dollar Index will likely gain strong downside momentum if it manages to settle below this level. A move below 90 will push the U.S. Dollar Index towards the support at 89.75 which will provide additional support to GBP/USD.

Today, foreign exchange market traders will focus on the economic data from the U.S. The second estimate of the fourth-quarter GDP Growth Rate is expected to show that GDP increased by 4.2% on a quarter-over-quarter basis.

Analysts expect that Durable Goods Orders grew by 1.1% month-over-month in January. Pending Home Sales are projected to remain unchanged. Initial Jobless Claims report is expected to show that 838,000 Americans filed for unemployment benefits in a week. Meanwhile, Continuing Jobless Claims are projected to decline from 4.49 million to 4.47 million.

Technical Analysis

GBP/USD received support near 1.4130 and is testing the nearest resistance level at 1.4150. If this test is successful, GBP/USD will move towards the next resistance which is located at 1.4180. A move above 1.4180 will push GBP/USD towards the next resistance level at the recent highs at 1.4240.

Id note that RSI remains in the extremely overbought territory so the risks of a pullback are high. At the same time, the current upside momentum is strong so GBP/USD will have a good chance to continue its upside move in case the U.S. Dollar Index declines below the support at the 90 level.

On the support side, the nearest support level for GBP/USD has emerged at 1.4130. If GBP/USD settles below this level, it will head towards the next support at 1.4100. A successful test of the support at 1.4100 will push GBP/USD towards the next support at 1.4070.