GBP/USD bears fade 1.4000 handle on USD strength

• US dollar bulls keep pushing higher and keep the GBP/USD and EUR/USD under pressure.
• The GBP/USD made a 100-pip intraday rally to 1.4000 on the back of EUR strength but 1.4000 blocked the advance.  

The GBP/USD is trading at around 1.3942 up 0.07% on Thursday as the US Dollar Index is breaking new highs at 90.50.

The GBP/USD was driven down over 500 pips in recent days by USD strength, poor macroeconomic data in the UK and dovish comments from Bank Of England officials. The greenback boost is mainly attributed to rising US yields.

After the ECB rate decision and while the ECB press conference took place. The cable got a boost up, helped by the euro, to almost reach 1.4000 against the US dollar. But the GBP rebound was short-lived as bears took advantage of the intraday 100-pip rally to establish new short position as the market advanced towards the 1.400 handle. 

Earlier, Mario Draghi President of the European Central Bank (ECB) proved to be rather upbeat on the Eurozone economy downplaying the recent slump and being confident that the 2% inflation target set by the Governing Council will eventually be reached. The EUR/USD reacted positively to the news and GBP/USD also. The euro weigh more than 56% in DXY. However, DXY pullback is now over as the index is breaking news highs close to 90.50.

Meanwhile, the US job data came above expectations which also help to keep the upbeat sentiment on USD.

However, the salient event that will most likely give the GBP/USD its next directional move will be the UK Gross Domestic Product scheduled on Friday at 8:30 GMT. The GDP is expected to stay at 0.4% quarter-on-quarter. A miss can make traders wonder if a rate hike is coming on May 12 as the previous data missed expectations and BoE officials expressed doubts about a rate hike at the next BoE meeting.

Equally important for the GBP/USD pair is the US inflation data and the release of the Gross Domestic Product on Friday. The US annualized GDP is expected at 2.3% which is a decline from the previous reading of 2.9%.

GBP/USD 4-hour chart 

The trend is bearish. Support is seen at 1.3900 swing low and at 1.3711 cyclical low. Resistance is seen at 1.4000 intraday high and figure and at 1.4100 figure.