“¢ GBP remains supported amid reviving BoE rate hike hopes.
“¢ Trade tensions weigh on the USD and provide an additional boost.
“¢ Resurgent US bond yields do little to lend any support to the USD.
The GBP/USD pair finally broke out of its Asian session consolidation phase and was now seen building on overnight gains, further beyond the 1.3400 handle.
The British Pound remains supported by the recent upbeat UK macro data – manufacturing, construction and services PMI, which seems to have reignited hopes for an eventual BoE rate hike move, either in July or August. This coupled with the ongoing US Dollar retracement, marking its third consecutive day of declines, remained supportive of the pair’s strong up-move to a two-week high level of 1.3429.
With trade developments continuing to grab all the market attention, traders largely shrugged off the incoming positive US economic data and continued dumping the greenback. Even a goodish pickup in the US Treasury bond yields did little to provide any immediate respite, with ECB QE exit talks lifting the shared currency and exerting some additional downward pressure on the buck.
The pair is currently placed at the top end of a short-term ascending trend-channel formation on hourly charts, which if cleared decisively should assist the pair to build on the ongoing recovery move from 6-month lows set last week.
In absence of any major market-moving economic data, either from the UK or from the US, the USD price dynamics might continue to act as an exclusive driver of the pair’s momentum on Wednesday.
Technical levels to watch
A strong follow-through buying has the potential to continue driving the pair higher towards the 1.3470-75 intermediate resistance en-route the key 1.3500 psychological mark.
On the flip side, the 1.3400-1.3390 region now seems to protect the immediate downside and is followed by support near mid-1.3300s, below which the pair could be headed back towards challenging the 1.3300 handle.
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