GBP/USD consolidates gains, upside limited below 1.2600

GBP/USD jumped during the American session amid a sharp decline of the US dollar. The greenback, measured by the US dollar index dropped to the lowest since mid-November. The DXY fell from above 100.00 to 99.36. 

Pound reverses and climbs toward 1.2600

Cable bottomed earlier today at 1.2411, the lowest in a week and then rebounded sharply, rising almost 200 pips from the lows. 

The rally stopped before the 1.2600 handle. The price peaked at 1.2589 and then pulled back modestly. It was trading at 1.2560/70, up 80 pips for the day. It is the first gain after falling the previous three trading days. 

The US dollar weakened amid comments from Donald Trump on currency devaluations. Equity prices in Wall Street were falling and bond yields were lower. The Federal Reserve started its 2-day meeting (decisions to be announced on tomorrow) while the Bank of England will meet on Wednesday (decision to be communicated on Thursday). No change is monetary policy is expected.  

GBP/USD levels

To the upside, immediate resistance levels are seen at 1.2600 (psychological), 1.2635 (Jan 25 high) and 1.2670/75 (Jan 26 high). On the opposite direction, support might be seen at 1.2520 (Asian session high), 1.2465 (Jan 30 low) and 1.2405/10 (daily low / 20-day MA).