GBP/USD bounces-back to 1.3550 as USD eases ahead of US PPI

• Finds respite from a retreat in the US dollar, higher UK stocks.
• Awaits fresh impetus from US PPI ahead of BOE’s Super Thursday.

The bid tone around the US dollar has weakened a bit over the last hour, allowing a tepid bounce in the GBP/USD pair from the 1.3500 support area. The USD index eased-off 4.5 month tops of 93.42 to now trade near 93.25 levels.

The rebound in the spot can be also attributed to a better sentiment towards the risk assets, reflected by higher European equities, as the oil-price rally regains momentum in Europe. Both crude benchmarks are at multi-year highs after the Trump’s decision on Iran’s nuclear deal fuelled expectations of tighter global supplies, as the US will re-impose sanctions on Iran.

However, it remains to be seen if Cable can sustain the recovery-mode, as the greenback is likely to remains broadly bid amid monetary policy divergence, especially with a rate hike expectations by the BOE pushed to August while the Fed remains on track to hike rates next month.

In the meantime, the focus remains on the US PPI data, which will keep the traders busy in the NA session ahead.

GBP/USD Technical Levels

In the view of Slobodan Drvenica at Windsor Brokers: “Steep fall from 1.4376 (2018 high) found footstep at 200SMA which resisted attacks in past three days, as repeated daily closes above 200SMA, keep the support valid. However, no firmer basing signal has been generated yet, that keeps the downside vulnerable, as clear break below 200SMA would spark fresh extension of pullback from 1.4376 and expose key support at 1.3442 (Fibo 38.2% of 1.1930/1.4376, post-Brexit recovery phase). Res: 1.3541; 1.3575; 1.3592; 1.3636. Sup: 1.3484; 1.3442; 1.3400; 1.3346.”