GBP/USD - Yield differential favors USD, bull flag on charts

Yield differential favors downside in the GBP/USD pair.
Still, the bull flag pattern on the daily chart keeps GBP bulls in the game.

Omkar Godbole FXStreet Contributor

GBP/USD fell sharply on Friday from 1.3448 to 1.3301 as US tax optimism strengthened the bid tone around the US dollar.

Currently, the 10-year US-UK bond yield differential stands at 122 basis points (bps); the highest level since Jun. 12. The rising yield spread adds credence to the lower highs pattern seen on the daily chart and indicates scope for a drop to 50-day MA of 1.3263. Also, short-term UK-US rate differential crashed to new YTD lows on Friday.

Still, all is not lost for the bulls as the daily chart shows a bull flag pattern. An upside break could revive the rally from the Nov. 13 low of 1.3062.

Focus on Brexit deal

Mario Blascak, Chief European Analyst at FXStreet, writes, "The shape of the Brexit deal is by far most important factor for the currency market. This is also what the bank of England has been saying in its December policy statement."

He adds, "With all the important events this year over, the GBP/USD is likely to remain within the broader range of $1.3210-$1.3450 for extended, pre-Christmas and post New Year period of time."

GBP/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "the daily chart for the pair shows that technical indicators have turned sharply lower, entering bearish territory, but also that the price holds far above its 100 and 200 SMAs, with the shortest now around 1.3230. Shorter term, and according to the 4 hours chart, the risk has lean towards the downside, as technical indicators entered negative territory, although with the downward momentum easing, while the decline accelerated on a break below the 100 SMA, and neared the 200 SMA, now a relevant support at 1.3285.

Support levels: 1.3310 1.3285 1.3230

Resistance levels: 1.3360 1.3400 1.3445

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD looks apathetic around 1.1770

EUR/USD comes under renewed pressure on Tuesday, deflating below the 1.1800 support and reversing two consecutive days of gains. The pair’s decline follows the persistent move higher in the US Dollar, as trade uncertainty dominates the sentiment ahead of President Trump’s SOTU speech.

GBP/USD regains 1.3500 and above

GBP/USD extends its advance for the third day in a row on Tuesday, this time retesting the area beyond the 1.3500 hurdle. Cable’s uptick comes despite decent gains in the Greenback and the dovish message from the BoE’s Bailey at the UK Parliament.

Gold appears offered around $5,150

Gold is giving back a good portion of the recent multi-day rally, receding to the $5,150 zone per troy ounce amid the decent bounce in the US Dollar and mixed US Treasuty yields. In the meantime, markets’ attention remain on upcoming comments from Fed speakers.

Crypto Today: Bitcoin, Ethereum, XRP come under renewed pressure amid ETF outflows, tariff uncertainty

Bitcoin, Ethereum and Ripple are trading under increasing selling pressure at the time of writing on Tuesday, as market participants navigate renewed tariff uncertainty. The Crypto King holds above $63,000, down 2% intraday from its $64,656 open.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.