GBP/USD climbs above 1.2900 on renewed USD weakness
- GBP/USD gained traction and rose above 1.2900 in the American session.
- Month-end flows seem to be weighing on the USD.
- Upbeat market mood is helping GBP/USD edge higher.
The GBP/USD pair gained traction in the early American session and climbed to a fresh daily high of 1.2921. As of writing, the pair was up 0.4% on the day at 1.2913.
DXY drops below 94.00
A fresh USD selloff seems to be fueling the pair's rally. In the absence of significant fundamental drivers, the sharp drop witnessed in the US Dollar Index (DXY) suggests that month-end flows are weighing on the greenback. At the moment, the DXY is flat on the day at 93.89.
Earlier in the day, the data from the US showed that employment in the private sector rose by 749,000 in September and the economic activity in the second quarter contracted by 31.4%. Both of these figures came in better than analysts' estimates and helped market sentiment turn positive.
Additionally, US Treasury Secretary Mnuchin noted that he was optimistic about reaching a coronavirus aid deal with Democrats. Boosted by the upbeat data and Mnuchin's remarks, Wall Street's main indexes gained traction and put additional weight on the safe-haven greenback's shoulders. The S&P 500 Index is currently gaining more than 1% at 3,371.
On the other hand, British Prime Minister Boris Johnson acknowledged earlier in the day that the coronavirus is a "serious and growing problem" in the UK. If COVID-19 cases continue to rise in the UK, the GBP could struggle to preserve its strength against its rivals.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
