GBP/USD spikes above 1.4200 on renewed USD weakness
- GBP/USD advanced to a fresh daily high above 1.4200.
- US Dollar Index turned south after staying quiet around 90.00.
- Focus shifts to high-tier macroeconomic data releases from US on Tuesday.
The GBP/USD pair spent the first half of the day fluctuating in a tight range around 1.4180 but gained traction during the American trading hours. As of writing, the pair was trading at a fresh daily high of 1.4118, rising 0.22% on a daily basis.
In the absence of significant fundamental drivers and macroeconomic data releases, month-end flows seem to be causing the greenback to weaken against its major rivals. The US Dollar Index is currently losing 0.22% on the day at 89.86. Additionally, the thin trading conditions due to the Memorial Day holiday in the US seem to be allowing major pairs to make sharp movements.
There won’t be any data releases featured in the UK economic docket on Tuesday. Later in the day, the ISM Manufacturing PMI, which is expected to improve to 61 in May from 60.7 in April, from the US will be looked upon for fresh impetus.
GBP/USD outlook
FX Strategists at UOB Group think that GBP/USD could post additional gains if it manages to clear the resistance at 1.4235.
“GBP has to close above 1.4235 before a sustained advance can be expected,” strategists noted. “On the downside, a breach of 1.4110 would indicate that the upside risk has dissipated. Looking ahead, the next resistance levels above 1.4235 are at 1.4265 and 1.4290.”