GBP/USD extends slide and approaches 1.3800

• US dollar holds onto modest daily gains across the board.
• GBP/USD heads for the lowest daily close in two weeks.

The GBP/USD dropped further after the beginning of the American session and printed a fresh daily low at 1.3821. Cable is hovering around 1.3830 and it has erased Wednesday’s gains.

The combination of a stronger US dollar and also a weaker pound pushed GBP/USD further to the downside. The greenback gained momentum after the release of US economic data.

Inflation data came in above expectations, with the IPP reading for July and jobless claims dropped in line with expectations. The DXY is up 0.11%, at 93.00. The 10-year yield initially rose boosting the dollar and then pulled back to 1.35%. Equity prices in Wall Street are mixed on a session with low volatility.

Looking bearish with some support

From a technical perspective, the outlook for GBP/USD favors the downside for the moment. The pair is testing the 20-day moving average. A daily close clearly under 1.3830 would favor an extension of current down move. The next strong support stands at 1.3800.

On the upside, a recovery above 1.3890 should clear the way to more gains for the pound and improve the outlook. A short-term downtrend lien stands at 1.3875.

Technical levels