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  • Pound holds onto losses versus US dollar and euro.
  • GBP/USD remains between wide range of 1.38/1.40.

The GBP/USD dropped to 1.3820 after the beginning of the American session. It then rebounded as the DXY approached daily lows, rising to 1.3856. As of writing, it trades around 1.3840, in negative territory for the day.

The pound is down versus the dollar and also against the euro. EUR/GBP trades above 0.8600, at the highest level in almost a week. In Europe, the best performer is the Swiss franc on Monday, probably reflecting some risk aversion that also weighs on GBP.

The US dollar lost momentum as the move higher in US yields eased. The 10-year approached 1.70% and pulled back to 1.68%. The DXY is falling 0.15% at 91.78, after being unable to regain the 92.00 level.

In Wall Street, US stocks are trending higher. The Dow Jones gains 0.22% and the Nasdaq gains 1.29%. Economic data from the US came in below expectations. The Chicago Fed’s National Activity Index dropped unexpectedly into negative to -1.09 in February from the 0.75 reading. It could be the first contraction since last April. If replicated by other indicators, the numbers could show the US economy is not as strong as many analysts consider.

Technically, the 1.3800 is a relevant support in GBP/USD. A daily close below would point to further losses. On the upside, the level to watch is 1.3895/1.3900 and the next resistance stands at 1.3950. On a wider perspective, the 1.40 zone is the level to break for the pound to end the current consolidation phase.

Technical levels