GBP/USD bulls challenge the 1.3600 handle as US Dollar retreats from highs

• All eyes on Bank of England’s Super Thursday.
• The US dollar is on the back foot as the US withdrawal from the Iran nuclear deal weighs on the greenback.
• The core US Producer Price Index (PPI) came in below expectations at 2.3% in April. 

The GBP/USD is trading at around 1.3593 up 0.34% on Wednesday as investors are slowly unwinding their short GBP/USD positions ahead of the Bank of England rate decision and quarterly Inflation Report on Thursday. 

Cable bulls gathered some momentum and managed to orchestrate a counter-trend move from the 1.3500 handle earlier in the European session to challenge the 1.3600 handle in the American session. 

The US dollar is trading lower on Wednesday below the 93.00 mark as investors are taking some profits off the table after US President Trump announced on Tuesday that he withdrew the US from the Iran nuclear deal. Adding pressure to the greenback is the worse-than-expected Producer Price Index (PPI) data. The PPI ex Food and Energy year-on-year to April came below expectations at 2.3% against 2.4% forecast by analysts. 

Technically, the GBP/USD is oversold and there is a combination of unwinding short positions and bottom pickers which is keeping the cable in the 1.3500-1.3600 range. The Bank of England’s Super Thursday will possibly give investors more details as to when the next rate hike will be coming next and give GBP some directionality.

GBP/USD 4-hour chart 

The GBP/USD medium-trend is bearish but it is resting at its 200-period simple moving average and is currently in a range between the 1.3500 and 1.3600 level. If bulls manage to reclaim the 1.3650 and 1.3700 resistance levels the trend can reverse to the upside. Supports are seen at the 1.3550 and 1.3500 psychological levels.