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  • DXY extends correction, drops below 92.00.
  • GBP/USD moving between 1.3850 and 1.3930, holding onto recent gains.

The GBP/USD climbed further after the beginning of the American session and reached at 1.3933, the highest level since last Thursday. Afterwards, it pulled back toward 1.3900. The move is being driven by the ongoing correction of the US dollar.

After moving sideways for hours, the greenback turned to the downside after US inflation data. The DXY fell to 91.78 as US yields pulled back. The economic data showed no major surprises. The slide of the dollar so far has been limited. Equity prices in Wall Street are rising for the second day in a row. The Dow Jones gains 1.13% and the Nasdaq 1.05%.

The improvement in risk sentiment and US yields are keeping GBP/USD supported while at the same time, the rally seems limited. Attention now turns to the debt auction for the US Treasury Department of $38 billion of 10-year bonds, which could create noise in the bond market.

From a technical perspective, the GBP/USD holds a bullish bias in the short-term. At 1.3900, a key support is seen: a decline below would point to another rejection and could weaken the pound. A key support is located at 1.3850; the slide below would offer signs the rebound from under 1.3800 is over. On a break above 1.3935/40, cable should strengthen the bullish tone.

Technical levels