GBP/USD hits three-week highs above 1.2600 as DXY tumbles

• US dollar tumbles across the board, DXY at weekly lows.
• GBP/USD up for the fourth consecutive day, extends rally from 1.2250.

The GBP/USD broke to the upside boosted by a broad sell-off of the US dollar. Cable peaked at 1.2601, hitting the highest level since June 16. As of writing, it trades at 1.2595, gaining for the fourth day in a row.

After moving sideways in tight ranges during hours, the US dollar broke to the downside, losing ground across the board. The DXY tested earlier the 97.00 area and now it stands below 96.50, at the lowest in two weeks. The decline took place even as US yields rebounded.

UK Chancellor Rishi Sunak's presented the new spending plans, having no significant impact across markets. Later during this week, more details about the lockdown will be provided. Regarding Brexit, no breakthrough in negotiations is seen in the short-term, but that scenario appears to be priced in.

In the US, the latest numbers of COVID-19 continue to show a dramatic situation. Wall Street indexes lost strength after Florida’s report. The Dow Jones gains just 0.06% and the Nasdaq 0.61%, both indexes far from the top.

Technical levels to watch