GBP/USD: Bears target 1.2800 as DXY bounces

The buying interest in the US dollar gathered pace across the board over the last hours, knocking-off GBP/USD sharply towards 1.28 handle.

Cable broke its Asian consolidative mode in early Europe, and came under aggressive selling pressure, mainly driven broad based US dollar rebound, despite a pause in the US yields rally.

Markets prefer to hold the US currency ahead of the Trump administration’s tax overhaul announcement due later in the American. However, the USD bounce may not last longer, as markets already believe that today’s announcement on tax reforms plan could once again lack details.

Moreover, a turnaround in risk condition, with risk-off seeping back into markets amid negative oil and subdued European equities, also added to the renewed downside seen in the spot.

GBP/USD Levels to consider            

A break above 1.2842/ 51 (daily top/ Apr 20 high) could lift the pair above 1.2871 (Apr 24 high), beyond which a test of 1.2912 (flash rally high) is imminent. Conversely, a break below 1.2819 (5-DMA), leading to a subsequent break below 1.2763/58 (10-DMA/ Apr 21 low) is likely to drag the pair towards testing its next support near 1.2722/00 (classic S3/ zero figure).