- A weaker US dollar continues to support GBP/USD.
- Cable recovers 1.3900, improving the short-term technical outlook.
The GBP/USD rose further during the American session, boosted by a broad-based slide of the US dollar. The pair reached at 1.3931, the highest intraday level before pulling back toward 1.3900. Cable is holding above 1.3900, erasing most of Friday’s losses.
The move higher took place as the DXY tumbled, falling under 91.00 amid a decline in US yields and risk appetite. The Dow Jones is up by 0.83% and the S&P500 by 0.35%, while the Nasdaq drops 0.42%.
Economic reports and the BoE
Regarding economic data, the ISM manufacturing index in April declined unexpectedly to 60.7, weakening the US dollar. After Monday’s data, the relevant reports in the US are the ADP private payroll on Wednesdays and the official employment report on Friday.
In the UK, the key event will be the Bank of England meeting. The decision and the statement are due on Thursday. Analysts at BBH expect the central bank to deliver a hawkish hold. “Rates are expected to remain steady but the bank may start tapering its asset purchases. At the last meeting March 18, the BOE didn’t seem overly concerned with the rise in gilt yields and noted then that “An aggregate measure of UK financial conditions has been broadly unchanged since the February Report.” Since then, UK yields are pretty much unchanged and so the concern probably remains low. GBP tends to strengthen on BOE decision days.”
Technical levels
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