GBP/USD: Bulls test 1.3450 as USD selling remains unabated

• DXY refreshes 4-week lows
• Awaits sentiment on the UK stocks.
• The UK high street lending, US data on tap.

The GBP/USD pair builds on the Asian gains and advances further towards the midpoint of the 1.34 handle in early Europe, as risk-on market profile combined with persistent broad-based US dollar weakness continue to lend support.

GBP/USD extends the break above 1.3400

A generalized selling in the US dollar remains the key theme so far this session, boosting the sentiment around GBP/USD, with the bulls now looking to regain 1.3450 levels en route 1.3500.

A sharp drop in the US consumer confidence gauge combined with the retracement in the US Treasury yields, especially the 10-year yields, add to the recent weakness seen around the greenback across its main competitors. The USD index resumed its sell-off to hit fresh four-week lows of 92.44 last minutes, losing -0.23% on the day.

Meanwhile, the pair looks forward to the second-liner Finance mortgage approvals data from the UK docket for fresh momentum ahead of the US initial weekly jobless claims, Chicago PMI and goods trade balance releases.

Also, the sentiment around the London stocks will play a crucial role, after the resource-heavy FTSE 100 index climbed to record highs a day before amid a rally in commodities prices.

GBP/USD Technical Levels

According to Haresh Menghani, Analyst at FXStreet, “Technically, the pair now seems poised to extend its up-move towards reclaiming the key 1.35 psychological mark, representing a short-term descending trend-line hurdle. A convincing break through the mentioned handle now seems to pave the way for an extension of the pair’s bullish trajectory towards late Nov./early Dec. highs resistance near mid-1.3500s en-route the 1.3600 handle, marking 61.8% Fibonacci expansion level of 1.3062-1.3550 up-move and subsequent retracement. On the flip side, the 1.3400-1.3390 region now becomes an immediate support to defend, which if broken seems to accelerate the fall back towards 1.3330 intermediate support ahead of the 1.3300 handle.”