GBP/USD nears 1.3500 as USD holds ground on upbeat data

GBP/USD stays on the back foot and approaches the 1.3500 mark after Wall Street's opening on Tuesday. The US Dollar benefits from better-than-expected Durable Goods Orders and Consumer Confidence data, making it difficult for the pair to gain traction.

GBP/USD Technical Overview

The Relative Strength Index (RSI) indicator on the 4-hour chart stays above 60 and GBP/USD remains within the upper half of the ascending regression channel, while holding above the 20-period Simple Moving Average, suggesting that the bullish bias remains intact in the near term.

Looking south, first support could be seen at 1.3500 (static level, round level) before 1.3480 (mid-point of the ascending channel) and 1.3400 (static level, round level). On the upside, 1.3600 (static level) aligns as the first resistance level ahead of 1.3720 (upper limit of the ascending channel).

Fundamental Overview

The broad-based US Dollar (USD) weakness on growing concerns over the fiscal outlook helped GBP/USD stretch higher at the beginning of the week. With financial markets remaining closed in observance of the Memorial Day holiday, however, the trading action turned subdued in the second half of the day on Monday, limiting GBP/USD's upside.

US stock index futures gain more than 1% in the European session on Tuesday, reflecting an improving risk mood. Easing fears over a prolonged trade conflict between the European Union and the United States (US) following US President Donald Trump's decision to delay 50% tariffs on European imports until July 9 seems to be allowing risk flows to return to markets.

Later in the day, April Durable Goods Orders and May CB Consumer Confidence Index data from the US will be watched closely by market participants. A noticeable recovery in consumer sentiment could support the USD with the immediate reaction. On the other hand, a further deterioration in confidence could hurt the currency and help GBP/USD regain its traction.