GBP/USD erases all gains after hitting two-week highs above 1.3800
- US dollar spikes lower and then recovers into the London fix.
- GBP/USD remains unable to move away from the 1.3750 zone.
The GBP/USD spiked to 1.3807 during the American session, reaching the highest level in two weeks and then pulled back quickly, back to the 1.3750 zone. Cable remains unable to move away from the 1.3750 area.
The moves in GBP/USD were driven by the US dollar that is moving sideways, on a volatile session. The greenback benefit from higher US yields over the last hours. The 10-year rose back above 1.30%.
Market participants await Friday’s NFP. Economic data from the US on Tuesday, showed the Conference Board’s Consumer Confidence declined to 113.8 in August from 125.1, below the market consensus of 124. The Chicago PMI fell to 66.8 in August from 73.4, also below expectations. On Wednesday, PMIs and the US ADP employment report are due.
Short-term outlook
The GBP/USD pair continues to move sideways around the 1.3750 level that is working as an equilibrium level. Another daily close here would be the third in a row, and the fourth out of the last five days.
A daily close above 1.3785 (20-day simple moving average) would be a positive development for the pound, while under 1.3690, the bearish pressure should intensify.
The bias still points to the downside in GBP/USD. The current bearish perspective in the short term could be negated with a firm rally above 1.3800.