GBP/USD rises to two-week highs above the 1.1400 level

• GBP/USD gains traction for the sixth day in a row and rises to a two-week high.
• The British government’s spin on removing higher tax rates continues to boost the British pound.
• The dollar extends its recent pullback and offers additional support to the pair.

The pair GBP/USD attracts some buying near the 1.1280 area and turns positive for the sixth day in a row on Tuesday. Momentum drives the pair to a 2-week high, breaking above the 1.1400 level again during the first hours of the European session, and it is due to a combination of factors.

The UK government’s pivot to reverse a controversial tax cut plan announced in its mini-budget last week continues to support sterling. On the other hand, the US dollar extends its recent sharp decline from two-decade highs amid the ongoing slide in US Treasury yields, offering additional support to the GBP/USD pair.

The Bank of England reaffirmed its willingness to buy up to £5 billion in long-term Gilts, which helped push US Treasury yields away from the multi-year high reached last week. In addition, the sentiment of risk appetite, represented by a strong recovery in global stock markets, is seen as another factor weighing on the dollar as a safe haven.

With the latest move, the GBP/USD pair confirms a break above the descending resistance line of almost two months. This could have already laid the groundwork for an extension of the recent recovery from the record low reached last Monday. In the absence of macroeconomic data from the UK, the pair remains at the mercy of the dynamics of the dollar price.

Later, at the start of the American session, traders will take note of the US economic docket, in which JOLTS job openings data and factory orders will be released. This coupled with speeches from FOMC members, US bond yields and broader risk sentiment will boost USD demand and provide a significant boost to GBP/USD.

GBP/USD technical levels