- Sustained selling around the USD and upbeat UK jobs report pushed GBP / USD to multi-week highs on Tuesday.
- The recovery in US bond yields offers some support to the USD and limits the pair’s gains.
The pair GBP/USD has retraced around 25 pips from the daily highs, returning initial gains and remaining virtually unchanged on the day around the region of 1.3985-90 during the European session on Tuesday.
The pair has extended the previous day’s massive move of over 180 pips and moved higher during the first half of Tuesday’s trading action. The rally has pushed the pair to the highest level since the beginning of March and has been supported by the prevailing bearish sentiment around the US dollar.. However, the bulls have struggled to capitalize on the move or find acceptance above the key psychological level of 1.4000.
The US dollar has fallen to six-week lows amid speculation that the Fed will keep interest rates near zero for a longer period. This, coupled with most of the upbeat UK monthly employment details, has provided additional boost to the GBP / USD pair and has remained supportive. Having said that, a combination of factors has offered some support to the USD and limited any further gains for the GBP / USD pair, at least for now.
A good one Recovery in US Treasury yields has helped ease downward pressure from the USD. This, coupled with a turnaround in US equity futures, has further bolstered the relative safe-haven status of the US dollar against the British pound. However, the drop remains supported amid optimism about the UK’s successful coronavirus vaccination campaign and the gradual reopening of the economy.
This makes it prudent to wait for a strong continuation sell before confirming that the recent strong move up from the support of the 100-day SMA has been exhausted. Therefore, any significant pullback could still be seen as an opportunity to initiate new bullish positions in the GBP / USD pair amid the absence of relevant US economic releases on Tuesday.
GBP / USD technical levels
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