- The improvement in risk sentiment weighs on the US dollar.
- GBP / USD rising after four consecutive days of declines.
The GBP/USD it rose further during the US session and hit a new daily high at 1.3694. The pound is hovering around the daily high with the positive tone intact, supported by a strong correction in the US dollar.
The dollar accelerated the decline in recent hours as stock prices rose further. On Wall Street, the Dow Jones was up 0.80% and the Nasdaq was up 0.50%. Rising US yields are not helping the dollar so far. The US 10-year yield is up 5% to 1.28%.
From a technical perspective, GBP / USD is about to test the 200-day moving average which is located at 1.3699. The area around 1.3700 is immediate resistance, followed by the 1.3750 area. A dip below 1.3635 should expose 1.3600 and the recent low.
The recent decline in GBP / USD, according to analysts at Rabobank, may have been accelerated by a deterioration in the technical outlook. “Last Friday’s cable broke due to an 8-day rising channel formation. At the beginning of the week, it broke below the 200-day SMA. Both were bearish signals. ”They note that sentiment has also been undermined by dovish comments earlier in the week from two Bank of England (BoE) officials.
At Rabobank, they consider that if the strength of the USD is contained, “this should allow the GBP / USD to fall back to the 1.39 region. However, this would probably require a slightly less cautious outlook on Bank of England policy. “