Market Overview

GBP/USD Forecast: Sterling Under Pressure As The US Treasury Yields Rise

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GBP/USD trades below 1.4000 psychological level as the US benchmark Treasury yields approach 3 percent.

  • With the GBP/USD breaking 1.3970 important support level, prices are seen sliding lower.

The GBP/USD is trading little changed on the downside against the US Dollar on Monday after the currency pair has been sold off from its cyclical high of 1.4377 all the way down to 1.4000 last week. The fundamental pressure on Sterling stems from the US benchmark Treasury yields that rose to 2.987 percent approaching the 3 percent important psychological level that support the US Dollar.

The GBP/USD was sold off its 22-month high last week after the trinity of the most important UK macro indicators all came out below expectation and the Bank of England Governor Mark Carney remained dovish while talking to BBC about the Bank’s interest rate outlook.

The FX market is still pricing in the possibility of the Bank of England raising the Bank rate by 25 basis point to 0.75 percent on May 10 when the Bank meets for the monetary policy decision and also publishes the fresh macroeconomic forecast in its Inflation Report followed by the press conference with Bank’s top officials.

Technically the GBP/USD is moving within downward trending channel with 1.3970 being a key support level representing 23.6 percent Fibonacci retracement level of the long-term uptrend from 1.2700 to current cyclical high of 1.4377. Technical oscillators turned lower with Slow Stochastic making a Bearish crossover within neutral territory on Monday morning while the Relative Strength Index remains still close to the oversold territory.

GBP/USD 1-hour chart

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Posted-In: FXStreetNews Eurozone Forex Markets

 

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