GBP/USD drops to test daily lows as USD strengthens

GBP/USD was unable to hold on top of 1.3500 and move back toward daily lows amid a rally of the US dollar across the board. 

The greenback gained momentum during the American session ahead of tomorrow’s FOMC decision. 

Cable reached 1.3536 following the release of US economic data and then bounced to the downside. During the last hour, it accelerated the decline and at the moment trades at 1.3475/80, slightly above 1.3465/70, where today and yesterday’s low are located. 

The slide is taking place as the US Dollar Index moves to test daily highs above 91.75 boosted by US bond yields that continue to rise. The 10-year yield reached 2.243%, the highest in a month. 

Levels to watch 

To the downside, the immediate support is the 1.3460 zone (Sep 18 & 19 low), followed by 1.3405 (Sep 14 high) and 1.3330 (Sep 13 high). On the upside, resistance levels might lie at 1.3520 (downtrend line), 1.3550 (Sep 19 high) and 1.3570.