GBP/USD rises back above 1.2750, set to test July highs

• Another sell-off of the US dollar gives GBP/USD a boost.
• Cable erases daily losses and looks at July highs.

The GBP/USD rebounded further and printed a fresh daily high, approaching the recent top. Cable climbed to 1.2760 and it is hovering around 1.2750 supported by a weaker US dollar across the board.

USD tumbles to new lows

After a short-lived recovery, the US dollar turned again to the downside, hitting fresh cycle lows versus the euro and the Swiss franc. It is flat versus antipodeans and emerging market currencies but trending lower.

The US Dollar Index (DXY) is testing the 2020 low at 94.68. Earlier on Thursday, it traded at 95.00 but it failed to hold to gains. The greenback can’t take a breath and is suffering another sell-off against majors. Economic data from the US (jobless claims and Kansas Fed Manufacturing Activity) did not offer relief.  

No particular catalyst triggered the last leg lower in USD, it is about broad weakness. In Wall Street, US stocks are posting modest losses. The Dow Jones falls 0.35% and the Nasdaq 0.28%.

Technical levels

The GBP/USD appears to be poised to test the July high at 1.2767. Above the next resistance might be seen at 1.2785/90 and then 1.2815 (June high). While above 1.2440, the bullish momentum will remain strong. Below support levels are seen at 1.2710, 1.2670 (daily low) and 1.2630.