GBP/USD drops to weekly lows near 1.3800 as the US dollar soars

• DXY jumps to test June highs, up 0.30%.
• Cable under pressure, under 1.3800 could test June lows.

The GBP/USD failed to hold to gains and tumbled toward 1.3800 amid a stronger US dollar during the American session. However, the greenback strengthened on the back of end-of-month flows.

Cable is under pressure, trading slightly above the 1.3800 zone. The greenback remains strong with USD/JPY above 111.00 and the DXY up 0.40%, at the highest since April, even as US yields drop and amid mixed results in Wall Street. End-of-month flows contribute to the dollar’s strength.

Economic reports from the US showed a larger-than-expected increase in private payrolls by 692,000 in June as reported by ADP. On Friday, the non-farm payroll report is due. Pending Home Sales rebounded in May 8%.

From a technical perspective, a slide under 1.3800 in GBP/USD would expose the June low of 1.3785. Below the next support stands at 13720. The negative tone will likely remain in place while under 1.3880 (short-term downtrend line).

Technical levels