The US dollar rose further after the release of the ISM Manufacturing index that surprised to the upside. GBP/USD dropped further and printed a fresh low at 1.2930, the weakest level since early Thursday.
Currently, it trades at 1.2944/47, as it attempts to move off lows but the bearish pressure persists. The US dollar continues to hold a strong tone in the market. The US dollar index is rising for the second trading day in a row. Is making a significant recovery to the 96.00 area, after bottoming on Friday at 95.20, the lowest since September.
The bullish stance was reinforced after the ISM report. The index climbed to 57.8 in June, clearly above consensus and the highest since August 2014. “The manufacturing sector is clearly a source of strength in the US right now, and the latest survey readings are a far cry from the sub-50 lows seen at the beginning of 2016”, said James Smith, from ING.
Corrective mode after double top
The pair is on a corrective mode after the rally of more than 400 pips from June 21 to June 30. On Friday, it peaked at 1.3030 two times, creating a double top patter and signaling a possible short-term peak.
The recent slide pushed the price below Friday’s lows. According to the mentioned formation, the target is seen around 1.2900. If the pair rise above 1.2965/70 it would remove the short-term bearish pressure.
Volatility over the next hours could slowdown, taking into account that the US bond market will close early and that tomorrow Wall Street will be closed because of Independence Day.