GBP/USD drops below 1.3200 as DXY strengthens

• Pound loses momentum as equity prices correct lower.
• US dollar boosted by higher Treasury yields, DXY at six-day highs.

The GBP/USD dropped further and fell to 1.3191, hitting a fresh daily low. It is hovering around 1.3200, under pressure and correcting lower after trading earlier on Wednesday momentarily above 1.3300, at two-month highs.

The pound lost momentum across the board as the rally in equity markets eased. In Wall Street, the Dow Jones failed to hold into positive territory and is falling by 0.08% while the Nasdaq gains more than 1.30%. The deterioration in risk sentiment weighed on GBP/USD.

Despite the retreat, the pound remains among the top performers of the current week supported by expectations that a deal will be reached between negotiators of the European Union and the United Kingdom.

The greenback gained momentum after the beginning of the American session. The DXY rose above 93.10 to the highest level in almost a week. Higher US yields are supporting the dollar. The 10-year yield stands at 0.96%, around the highest levels since March.

Technical levels