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GBP / USD advances toward 1.3780 amid USD retracement and bullish BoE

  • GBP / USD posted fresh daily gains on Tuesday at the start of the European session.
  • Lower US Treasury yields weigh on USD demand.
  • The British pound enjoys rising expectations of the BoE rate hike and gains fueled by optimism around Brexit.

The GBP/USD it ignores the defensive move of the previous day and moves higher on Tuesday. The pair has jumped more than 50 pips during the day. At the time of writing, GBP / USD is trading at 1.3776, up 0.36% on the day.

The movement is mainly due to the selling pressure around the USD. A number of factors have helped the recent decline in the dollar. The Weaker US data coupled with a pullback in Treasuries weigh on the outlook for the US dollar. US industrial production fell 1.3% in September due to constraints in supply chains and Hurricane Ida. Benchmark 10-year bond yields in the United States recede toward 1.57% as investors digest Fed expectations.

Secondly, the British pound has strengthened following optimistic comments from the Governor of the Bank of England (BoE), Andrew Bailey. He was quoted as saying that the central bank is ready to raise interest rates as inflation risks arise. However, BoE members Silvana Tenreyro and Catherine Mann withdrew their opinion on inflation as “transitory.”

Meanwhile, the Prime Minister of the United Kingdom, Borris Johnson promised to fix a solution to the Northern Ireland Brexit Protocol. This, in turn, raised the British pound.

Regarding the economic data, investors are keeping their attention on the construction and housing permits of the United States, which will be announced at the beginning of the American session.

GBP / USD technical levels

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