GBP/USD fails again to break 1.3750 and retreats

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  • Cable flat for the day remains sideways, limited by 1.3750.
  • US dollar still weak across the board on risk appetite, DXY slides 0.10%.
  • Market participants ignored US data, focus remains on Fed Chair Powell’s speech.

The GBP/USD gained momentum during the American session and rose to test daily highs slightly below 1.3750 and again it failed and pulled back toward 1.3700. The pair is hovering around 1.3710/15, flat for the day, holding onto Monday’s gains.

The key driver in Cable’s rally was a decline of the US dollar across the board. The greenback remains weak but during the last hour, it recovered ground versus European majors and the yen.

Global risk sentiment remains positive but not looking as positive as Monday. In Wall Street, the Dow Jones is off highs, up 0.12% and the Nasdaq gains 0.43%. Slightly higher US yields limited the dollar’s negative momentum. The 10-year yield stands at 1.27%.

Data released on Tuesday showed a larger than expected decline in the Richmond Fed Manufacturing Index dropped more than anticipated in August to 9 from 27. A separate report showed New Home Sales increase 1% in July to 708K (annual rate), above the 700K of market consensus. The key event ahead is Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday.

Strong resistance between 1.3730 and 1.3760

The GBP/USD faces a strong resistance band under 1.3760. If it breaks and holds above, an extension toward 1.3800 seems likely. On the flip side, a slide below 1.3670 should weaken the pound, exposing the critical 1.3600 area.

Technical levels

 

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