GBP/USD retreats further below 1.3100 as USD rallies

GBP/USD has fallen almost a hundred pips from daily highs, as the US dollar recovers ground across the board. Cable is back below 1.3100 and moving toward the level it had before Fed’s decision. 

More profit taking 

Earlier today GBP/USD climbed to 1.3157, the strongest level since September. The pair failed to hold above 1.3150 and started to retreat. During the last hours, the bearish correction gained intensity, pushing the pair into negative territory for the day.

Recently it bottomed at 1.3067, 20 pips above where it was before the FOMC statement. From the highs dropped 90 pips. 

Economic data 

During the European session, the pound received a brief boost after a stronger-than-expected rise in UK retail sales, published by the CBI survey. US data also surprised to the upside and offered the greenback an impulse. Durable goods orders expanded 6.5% in June, above the 3% expected. 

UK: Economic momentum slows in H1 2017 – Lloyds Bank

US: New orders for manufactured durable goods in June increased $14.9 billion

The US dollar moved modestly to the upside after the reports and then accelerated the correction. It has eared most of yesterday’s losses. The statement from the Federal Reserve on Wednesday triggered a sharp decline of the dollar, that now is making a strong reversal. 

The Dollar Index, that bottomed earlier today at 92.96 (1-year low) is now moving toward 94.00, having the best day in weeks. 

GBP/USD levels to watch 

To the upside, resistance levels might be located at 1.3105 (Asian session low), 1.3125 (20-hour moving average) and 1.3160 (daily high). On the downside, support could be seen at 1.3050/55 (Jul 19 high), 1.3000/05 (Jul 18 low) and 1.2955 (Jul 13 high).