GBP/USD retreats below 1.4200 after advancing to multi-month highs
- GBP/USD remains on track to close third straight day higher.
- US Dollar Index recovers modestly, stays below 90.00.
- Upbeat UK labour market report helped GBP gather strength.
The GBP/USD pair closed the first day of the week in the positive territory and preserved its bullish momentum on Tuesday. After touching its highest level since late February at 1.4220, however, the pair erased a portion of its daily gains and was last seen trading at 1.4188, where it was up 0.38% on a daily basis.
GBP capitalizes on strong labour market data
Earlier in the day, the monthly data published by the UK's Office for National Statistics (ONS) showed that the Unemployment Rate declined to 4.8% in March from 4.9% in February. Additionally, the Claimant Count Change arrived at -15.1K and came in much better than the market expectation for an increase of 25.6K. The upbeat UK jobs report helped the GBP outperform its rivals during the European trading hours.
Meanwhile, the greenback faced heavy selling pressure amid the positive shift witnessed in market sentiment and the US Dollar Index (DXY) dropped to a fresh 12-week low of 89.69. With Wall Street's main indexes trading mixed, the DXY managed to stage a modest recovery and is currently losing 0.3% at 89.91.
On Wednesday, the Consumer Price Index (CPI) data from the UK will be looked upon for fresh impetus. Later in the day, the FOMC will release the minutes of its April policy meeting.
Technical levels to watch for