- Initial resistance in GBP / USD has faded in recent trading, with a stronger dollar pushing the pair to the low of 1.3750.
- Higher yields and strong data are helping the dollar, but sterling is holding up better than some G10 currencies.
The initial resistance of the GBP/USD (the pair was holding above 1.3750 at the start of the European session) has faded since the arrival of US market participants and the pair has now dropped below 1.3750. In the session, that means that the pair is down about 0.3% or close to 40 pips.
Technically speaking, things look bearish for the pound; After breaking below the 50-day moving average on March 23, the GBP / USD re-tested, but failed to overcome this key resistance level earlier this week – the classic breakout and retest! ! So unsurprisingly, after it failed to break above the 50 DMA again (which is currently at 1.3830), the pair has been on the defensive and short-term bears will look for a move back to. the monthly lows at 1.3675.
Performance of the day
A rally in US government bond yields was the initial catalyst behind the strength of the USD on Tuesday, with the 10-year yield hitting new cycle highs above 1.77% early in the session earlier. of retreating towards 1.70% and real yields also rising. However, with bond yields down in recent trading, the USD has had to seek momentum elsewhere and has received a lot in the form of very strong US data.
UK update
Keep in mind that while the USD has taken a portion of the British pound on Tuesday, the currency is holding up better than most other G10 currencies; While the British pound is down 0.3% on the day against the dollar, the euro and Canadian dollar are down 0.4% and the yen and Australian are down closer to 0.5%. The British pound continues to draw some underlying support from the UK’s relatively strong short-term economic outlook.
The UK’s vaccine launch has been one of the best in developed countries and vaccine shortage fears are taking a back seat as the UK prepares to receive Moderna and Novavax vaccines in April for the first time. . Meanwhile, the rate of infection, hospitalization, and death from Covid-19 continues to trend downward, a sign that the strict lockdown and rapid launch of the vaccine have been effective; this is in stark contrast to the EU and now the US, where cases are increasing.
The government therefore remains confident that the UK will be able to continue with its roadmap to reopen as scheduled and on Monday it will advance to what is effectively stage 1.5 (the stay-at-home order has been removed and the restrictions to meet other households outside and outdoor activities have slowed), but the big boost to the economy will come on April 12, when nonessential retail is given the green light to reopen.
Technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
