- DXY drops below 96.50, to lowest in almost three months.
- Cable erased losses and rises to test daily highs.
The GBP/USD pair rose more than a hundred pips from the daily low it reached during the European session at 1.2616. It recently climbed to 1.2743, slightly below the daily top of 1.2755, the strongest since March 12.
Cable gained momentum on the back of a weaker US dollar. The greenback was recovering ground but it turned to the downside, extending the decline that started more than a week ago. The US Dollar Index (DXY) broke under 96.50 and tumbled to 96.30, the lowest since mid-March.
In Wall Street, equity prices are falling from multi-month highs but the pound is not being affected. The two-day FOMC meeting started on Tuesday. The central bank is expected to keep rates unchanged.
Regarding the Bank of England, Monetary Policy Committee member Cunliffe said the coronavirus crisis “is far from over” and warned that another “sharp repricing of risk is still possible, but the first stage of the crisis is over”.
Technical outlook
The bias in GBP/USD continues to point to the upside. The correction seen on Tuesday found support again around 1.2630 and rose back above. On the upside, the 1.2730/50 area is the level to break in order to clear the way to more gains.
Cable gains for the eight day in a row, so a correction or consolidation seems overdue. The critical support might lie at 1.2630: a confirmation below would point to an extension of the correction. The next level to watch is 1.2480/90.
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