GBP/USD spikes to 1.3800 neighbourhood amid renewed USD selling

The USD witnessed heavy selling during the early North American session and pushed the GBP/USD pair to fresh daily tops, back closer to the 1.3800 mark.

The US dollar struggled to preserve its modest intraday gains, instead witnessed some fresh selling at higher levels amid uncertainty about the likely timing of the Fed's tapering plan. This, in turn, was seen as a key factor that assisted the GBP/USD pair to attract some dip-buying near the 1.3730 region, or weekly lows touched earlier this Wednesday.

The USD lost some additional ground following the disappointing release of the ADP report, which showed that the US private-sector employers added 374K jobs in August. This was well below consensus estimates pointing to a reading of 613K and the previous month's figure was also revised down marginally to 326K from the 330K reported earlier.

The data further seemed to have dashed hopes for an earlier than expected Fed lift-off, which was evident from a sharp intraday pullback in the US Treasury bond yields. Apart from this, the risk-on mood – as depicted by a generally positive tone around the equity markets – undermined the safe-haven greenback and provided a goodish lift to the GBP/USD pair.

It, however, remains to be seen if bulls are able to capitalize on the move or once again struggle to make it through a technically significant moving average. Hence, it will be prudent to wait for a sustained move beyond the mentioned barrier, currently around the 1.3810 region, before placing any aggressive bullish bets around the GBP/USD pair.

Next on tap will be the release of the US ISM Manufacturing PMI. The data, along with the US bond yields and the broader market risk sentiment, might influence the USD price dynamics. This, in turn, might provide some impetus to the GBP/USD pair and allow traders to grab some short-term opportunities.

Technical levels to watch