GBP/USD challenges 1.3900 amid weaker USD, ISM in focus
- GBP/USD is riding higher on the wave of the UK reopening optimism, upbeat data.
- DXY tests 92.00 as post-NFP sell-off extends ahead of the US ISM Services PMI.
- Daily technical setup warrants caution for the GBP bulls going forward.
Renewed selling interest seen around the US dollar is driving GBP/USD closer towards the 1.3900 level, as the dollar bears remain in control ahead of the US ISM Services PMI release.
The greenback continues to lose ground across the board amid mounting tensions ahead of Wednesday’s FOMC June meeting’s minutes. The minutes could likely pour cold water on the Fed’s hawkish dot plot chart, according to markets’ expectations.
On the GBP-side of the story, the UK reopening optimism, in response to PM Boris Johnson’s outline to ending England’s covid restrictions, collaborates with the bullish sentiment around the cable.
Further, an upward revision to the UK Final Services PMI combined with news about the M&A between Apollo Global Management and WM Morrison, Britain’s fourth-largest supermarket chain, buoyed the pound.
Looking ahead, the pair awaits the US ISM Services PMI release for fresh trading impetus. In the meantime, the oil-price rally is likely to lift the energy-intensive FTSE 100 index, in turn, rendering GBP-positive.
GBP/USD: Technical outlook
Despite the three-day uptrend, GBP/USD’s daily technical setup signals caution for bullish traders.
The spot is on the verge of confirming a bear cross on the said time frame, with the 21-Daily Moving Average (DMA) likely to pierce the horizontal 100-DMA from above.
GBP/USD: Daily chart
The 14-day Relative Strength Index (RSI) holds firmer but remains below the midline, keeping the buyers unnerved.
The previous week’s high near 1.3940 will be the level to beat for the GBP bulls while the downside will be capped by the daily lows of 1.3842.
GBP/USD: Additional levels