GBP/USD is rising on the back of optimism surrounding the UK’s reopening and positive data.
As the post-NFP sell-off continues ahead of the US ISM Services PMI, the DXY hits 92.00.
The GBP bulls should be cautious going forward due to the daily technical setup.
As the dollar bears maintain control ahead of the US ISM Services PMI announcement, renewed selling pressure in the US dollar is pushing GBP/USD closer to the 1.3900 mark.
The dollar continues to lose ground across the board as tensions rise ahead of the release of the minutes from the June FOMC meeting on Wednesday. According to market predictions, the minutes will likely cast doubt on the Fed’s hawkish dot plot chart.
On the GBP side of the tale, the UK’s reopening optimism, in reaction to Prime Minister Boris Johnson’s proposal to eliminate England’s covid restrictions, combines with the cable’s positive feeling.
The pound was also boosted by a higher revision to the UK Final Services PMI, as well as reports of an M&A between Apollo Global Management and WM Morrison, Britain’s fourth-largest grocery chain.
Looking forward, the pair will be looking for new trade momentum as the US ISM Services PMI is released. Meanwhile, the rise in oil prices is expected to strengthen the energy-intensive FTSE 100 index, which will boost GBP.
Despite the three-day advance, the daily technical setup for GBP/USD warns bullish traders to be cautious.
On the aforementioned time frame, the 21-Daily Moving Average (DMA) is on the approach of confirming a bear cross, with the horizontal 100-DMA likely to be pierced from above.
The 14-day Relative Strength Index (RSI) is firmer, but it is still below the midline, which makes buyers nervous.
The previous week’s high near 1.3940 will be the level to beat for GBP bulls, while the daily lows of 1.3842 will cap the downside./n
