GBP/USD is testing the resistance at 1.3270 as the U.S. dollar continues to lose ground against a broad basket of currencies.
The U.S. Dollar Index has managed to settle below the support at 92.50 and is trying to get to the test of the next support level at 92.10. If the U.S. Dollar Index moves below 92.10, it will head towards its yearly lows at 91.75 which will be bullish for GBP/USD.
Today, foreign exchange market traders will focus on Brexit news and inflation data from the UK. Time is running out for EU and UK to reach a compromise deal but recent reports suggest that both sides moved closer to a deal.
In recent trading sessions, the pound was supported by optimism about a successful deal so any negative news on this front will put serious pressure on the British currency.
The UK will soon provide Inflation Rate and Core Inflation Rate data for October. Inflation Rate is projected to decrease by 0.1% month-over-month as coronavirus continued to put pressure on consumer activity and prices. On a year-over-year basis, Inflation Rate is expected to grow by 0.6%.
Meanwhile, Core Inflation Rate is expected to increase by 1.3% year-over-year. Any weakness in inflation numbers will signal that UK economy is slowing down faster than expected due to coronavirus surge.