- GBP / USD is moving higher on Tuesday, although it lacks a strong continuation buy.
- The optimistic US economic outlook supports the USD and limits the pair’s gains.
The pair GBP/USD has soared higher, climbing to a high near 1.3885 at the start of the European session on Tuesday. However, the move has lacked a strong continuation buy and is at the time of writing back towards the 1.3860 region, still positive on the day.
The pair has continued its struggle to register a significant recovery from lows of nearly a month, from levels below 1.3800 touched after the upbeat US NFP report on Friday. The underlying bullish sentiment around the US dollar it has been seen as a key factor preventing the pair’s bulls from opening aggressive new positions and limiting the rise in GBP / USD.
The USD has held in high ground near the three-and-a-half-month highs, supported by optimistic US economic outlook. Against the backdrop of the impressive rate of COVID-19 vaccination, the passage of a huge US fiscal spending bill has further raised hopes for a relatively faster US economic recovery and has continued to prop up the dollar.
Saturday, The United States Senate voted 50-49 in favor of the $ 1.9 trillion pandemic aid package from US President Joe Biden, prompting another sell-off in the US bond market. This, coupled with expectations of a pick-up in US inflation, has pushed the yield on the benchmark 10-year US bond back closer to the more than a year highs hit last week.
Meanwhile, the United States Secretary of the Treasury, Janet Yellen said on Monday that the package would provide sufficient resources to fuel a very strong US economic recovery.. Yellen also added that there are tools to deal with inflation, which caused a modest setback in US bond yields. This, in turn, limited the USD and offered some support to the GBP / USD pair.
The pound sterling has also been supported by the relaxation of the blocking measures due to coronavirus in the UK. As a first step in a four-phase plan, all schools reopened as of March 8 and two people will be allowed to meet in public spaces outdoors. That said, the lack of subsequent buying around GBP / USD warrants some caution for the bulls.
There is no major economic data release on Tuesday, neither from the UK nor the US This makes it more prudent to wait for some solid continuation buying to take place before positioning for additional gains and confirming that the recent pullback from the highs of almost three years it has already ended.
GBP / USD 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.
