GBP/USD Forecast: Sterling is far from safety as another US bond auction may trigger a reversal
Premium|You have reached your limit of 5 free articles for this month.
Get all exclusive analysis, access our analysis and get Gold and signals alerts
Elevate your trading Journey.
UPGRADE- GBP/USD has been benefiting from falling US bond yields.
- Another bond auction and infrastructure spending may turn things around.
- Thursday's four-hour chart is painting a bullish picture.
A disruption to Britain from America – no, not the royals' "Night at Oprah's" but the moves in GBP/USD triggered almost exclusively by US bond yields. An auction of ten-year Treasuries concluded with calm on Wednesday, allowing the dollar to retreat from its highs and cable to climb higher.
Will the upbeat mood in markets continue? After that successful offering, Uncle Sam is now selling 30-year bonds – which may already see weaker demand. An increase in returns on US debt linked to mortgages may send shivers down investors' spines and boost the greenback.
See US 10-year Treasury Auction: Temporary relief
Another booster for the greenback may come from the White House. President Joe Biden has yet to sign the $1.9 trillion covid relief package approved by Congress, and new plans have already surfaced. The administration is reportedly examining a $2.5 trillion infrastructure bill, which may receive some Republican support for a change.
If additional headlines lay the ground for further spending, that would also push yields and the dollar higher. After Wednesday's inflation figures missed estimates, Thursday's weekly jobless claims will be of interest.
See US Initial Jobless Claims Preview: The two-track labor market returns
What about the pound? While the EU and the UK are at loggerheads over vaccine exports, but that does not seem to affect currencies. Britain's vaccination campaign continues at full speed ahead, raising hopes for a quicker return to normality. Yet that is not news.
All in all, the next moves depend on the dollar, which may switch direction once again.
GBP/USD Technical Analysis
Pound/dollar is heading towards the 100 Simple Moving Average on the four-hour chart, which converges with the daily high of 1.3965. Momentum is to the upside and the pair already topped the 50 SMA. All in all, bulls are in the lead, but resistance remains significant.
Above 1.3965, the next hurdle is 1.4015, followed by 1.4050 and 1.4075.
Some support awaits at 1.3925, a swing high from earlier this week, followed by 1.3850, 1.3830 and 1.3775 – a strong support line.
- GBP/USD has been benefiting from falling US bond yields.
- Another bond auction and infrastructure spending may turn things around.
- Thursday's four-hour chart is painting a bullish picture.
A disruption to Britain from America – no, not the royals' "Night at Oprah's" but the moves in GBP/USD triggered almost exclusively by US bond yields. An auction of ten-year Treasuries concluded with calm on Wednesday, allowing the dollar to retreat from its highs and cable to climb higher.
Will the upbeat mood in markets continue? After that successful offering, Uncle Sam is now selling 30-year bonds – which may already see weaker demand. An increase in returns on US debt linked to mortgages may send shivers down investors' spines and boost the greenback.
See US 10-year Treasury Auction: Temporary relief
Another booster for the greenback may come from the White House. President Joe Biden has yet to sign the $1.9 trillion covid relief package approved by Congress, and new plans have already surfaced. The administration is reportedly examining a $2.5 trillion infrastructure bill, which may receive some Republican support for a change.
If additional headlines lay the ground for further spending, that would also push yields and the dollar higher. After Wednesday's inflation figures missed estimates, Thursday's weekly jobless claims will be of interest.
See US Initial Jobless Claims Preview: The two-track labor market returns
What about the pound? While the EU and the UK are at loggerheads over vaccine exports, but that does not seem to affect currencies. Britain's vaccination campaign continues at full speed ahead, raising hopes for a quicker return to normality. Yet that is not news.
All in all, the next moves depend on the dollar, which may switch direction once again.
GBP/USD Technical Analysis
Pound/dollar is heading towards the 100 Simple Moving Average on the four-hour chart, which converges with the daily high of 1.3965. Momentum is to the upside and the pair already topped the 50 SMA. All in all, bulls are in the lead, but resistance remains significant.
Above 1.3965, the next hurdle is 1.4015, followed by 1.4050 and 1.4075.
Some support awaits at 1.3925, a swing high from earlier this week, followed by 1.3850, 1.3830 and 1.3775 – a strong support line.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.