- GBP / USD gained traction for the third day in a row, although it struggled to capitalize on the move.
- A modest rally in US bond yields benefits the USD and limits the pair’s gains.
- A subsequent dip below the 1.3745-40 region will shift the bias in favor of the bears.
The pair GBP/USD has fallen around 50 pips from the daily highs, returning initial gains and falling near the lower limit of its daily trading range just above the 1.3750 region.
The pair has extended this week’s bounce from the 100-day SMA support, near the 1.3670-65 region, and has gained traction for the third day in a row on Wednesday. The momentum has pushed the GBP / USD pair to one-week highs and has been solely due to the sustained selling around the US dollar during the first half of the day.
However, the bulls have had Difficulty capitalizing on the move or finding acceptance above the round 1.3800 level. As investors took in yesterday’s unimpressive US CPI report, a modest rally in US Treasury yields has helped the USD rebound from three-week lows and triggered some selling around GBP / USD.
Apart of this, Concerns about a possible link between AstraZeneca’s coronavirus vaccine and a rare blood clotting disorder it has prevented the GBP bulls from opening new positions. Investors now seem concerned that a temporary ban on this vaccine for the under-30 age group could delay the UK government’s plan to reopen the economy.
Even from a technical perspective, the emergence of some higher selling suggests that the positive movement seen since earlier this week may have lost steam. A subsequent dip below the 1.3745-40 region will reaffirm the negative bias. and it will make the GBP / USD pair vulnerable to further decline.
There is no major economic data release on Wednesday. Therefore, the key focus of attention will be on a speech scheduled by Fed Chairman Jerome Powell during the American session, along with US bond yields that will influence USD price dynamics and could generate some short-term trading opportunities around GBP / USD.
GBP / USD technical levels
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