- GBP / USD reversed its direction in the second half of the day.
- The US Dollar Index climbed above 92.50 on Tuesday.
- Risk aversion is helping the USD find demand.
After climbing towards 1.3900 during the European session, the pair GBP/USD came under renewed downward pressure in the second half of the day and was last seen shedding 0.26% at 1.3809.
DXY capitalizes on risk aversion flows
The renewed strength of the USD in the US session appears to be weighing on the GBP / USD. The observed negative shift in the market mood is helping the USD find demand as a safe haven. Currently, the US Dollar Index (DXY) is up 0.3% to 92.52. Reflecting the risk-off environment, the Dow Jones Industrial Average and S&P 500 indices were down 1.3% and 0.75%, respectively.
Hours earlier, data released by the Institute for Supply Management (ISM) showed that business activity in the US service sector continued to expand in June with the PMI reaching 60.1. However, this reading was weaker than the May 64 figure and disappointed the market’s expectation of 63.5.
On the other hand, UK data revealed on Tuesday that Markit’s construction PMI improved to 66.3 in June from 64.2. However, these data had little or no impact on the performance of the British pound against its main rivals.
There will be no release of US data for the remainder of the day and the USD market valuation is likely to continue to affect GBP / USD action.