GBP/USD rises to fresh one-week highs near 1.3835

• US dollar extends slide across the board during the American session.
• Pound prints fresh highs versus dollar, euro, and yen.

The GBP/USD broke above 1.3800 and rose to 1.3833, the highest level since July 16. Cable is rising for the fourth time out of the last five trading days as it continues to recover from the five-month low it reached last week at 1.3571.

The rally pushed the pair back above the 20-day moving average on Monday. The main driver is a broad-based decline of the US dollar. The DXY is falling by 0.37%, under 92.55, even as US yields moved off lows.

US stocks are higher, with the Nasdaq hitting fresh record highs. The improvement in risk sentiment helped the pound that is up also versus the euro and the yen.

Eyes on the Fed

The economic calendar shows a quiet for the United Kingdom. “With little in the way of data, markets will likely focus on the virus numbers.  The response remains chaotic, with London Mayor Khan urging the Johnson government to relax isolation rules for any vaccinated people who come into contact with an infected person,” said analysts at Brown Brothers Harriman.

In the US, the key event will be the two-day FOMC meeting. Analysts at ANZ expect tapering discussions will step up in intensity. “These will focus on timing, speed, and composition. Recent comments from Chair Powell suggest the Fed is some months off an announcement on tapering.” They see the Fed holding onto the assessment of a strengthening economy and transitory inflation. “we don’t anticipate any change to its guidance on rates or asset purchases.”

Technical levels