GBP/USD holding 1.3400 amid mild USD correction

GBP/USD remains under pressure as US Dollar gets boosted by US-China trade talks.
Inflation Report Hearings on Tuesday is the next market mover.
USD breaks to a new multi-week high, all eyes on FOMC’s minutes on Wednesday.

Flavio Tosti Independent Analyst

The GBP/USD pair is trading at around 1.3413 down 0.41% on Monday’s trading after falling as low as 1.3390 earlier with the massive US Dollar strength stemming from the truce between the US and China in the trade dispute.

Cable made a high at 1.3480 in Asia and then fell a little more than 90 pips to 1.3390. In Europe, the pair rebounded about 50 pips and is now consolidating in the 1.3410 as the US Dollar is having a mild correction.

The US Dollar had another boost higher in Asia on the back of constructive comments from both US and Chinese officials over trade talks.

The US and China have been in the midst of a trade war for months and the second round of talks this Saturday proved to be rather conclusive as it sent stock indices worldwide higher and the US Dollar to a new multi-week high.

On the other hand, GBP negative sentiment persists. Brexit negotiations over customs union keep investors on the edge while the uncertainties of a next rate hike in the summer also weigh on GBP.

Tuesday’s will see the Inflation Report Hearings which is conducted on a quarterly basis and dive into inflationary and economic projections used by the UK’s Monetary Policy Committee (MPC) to take interest rate decisions. Traders should expect lots of volatility.

Looking further, Wednesday will see the FOMC’s minutes at 18:00 GMT and any hints that the US economy and inflation are on track could potentially send USD even high.

GBP/USD 4-hour chart

Author

Flavio Tosti

Independent Analyst

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