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The bulls expect a sustained move above the 1.3600 level

  • GBP / USD gains strong positive traction on Tuesday and recovers further from the two-week lows.
  • Bank of England Governor Andrew Bailey downplays the negative rate speculation and provides a strong boost to the GBP.
  • The current strong rally in US bond yields continues to prop up the USD and limit gains.

The pair GBP/USD maintains its strong buying tone at the start of the American session, with the bulls waiting for some further purchases above the 1.3600 level.

The pair has extended on the previous day’s bounce, from the two-week lows around 1.3450, and gained strong positive traction on Tuesday, breaking four consecutive days of losses. Buying interest has accelerated after the Governor of the Bank of England, Andrew Bailey, has played down speculation about negative interest rates.

Bailey said that there are many problems with negative interest rates and that he will soon come to any conclusions on the need for future stimulus. Bailey’s comments have also indicated that The Bank of England is likely to wait and see how the economy reacts to Brexit and the third lockdown in the UK before making a decision.

The not-so-pessimistic comments have provided a strong intraday boost to the British pound. This, coupled with a subdued demand for the US dollar, has led to some short hedging around the GBP / USD pair. Having said that, the current strong rally in US Treasury yields continues to prop up the dollar and limit any further gains.

There is no major economic data release on Tuesday, neither from the UK nor from the US Therefore, US bond yields will continue to play a dominant role in influencing USD price dynamics. This, along with developments around the coronavirus saga, will be considered to build short-term business momentum.

GBP / USD technical levels

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