Home GBP/USD Outlook: Bears to Break 1.20 amid US Yields, COVID

GBP/USD Outlook: Bears to Break 1.20 amid US Yields, COVID

  • GBP/USD remains silent above the 1.2000 area during holidays.
  • Fading optimism about COVID is pushing the US dollar higher.
  • Technically, the pair lacks any momentum with a bearish bias.

The GBP/USD outlook remains dominated by the bears as the Greenback turns positive amid stronger yields and fading COVID-led optimism. With mixed cues and the holiday season at the end of the year, the GBP/USD pair struggles to find a clear direction. The US dollar remains underpinned as the US Treasury yields managed to gain higher. Prices are falling due to fading optimism related to Covid in the UK and China.

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Reuters reported that UK Health Security Agency chief officer Nick Watkins said in a statement: “Now that vaccines and therapeutics have enabled us to get to the stage where we are living with COVID-19, surveillance has been reduced, but multiple indicators are still closely monitored, so it is no longer necessary to publish that specific data.” The news also said the UK would continue releasing its weekly influenza and COVID-19 surveillance and infection reports.

China, however, has announced several measures to ease concerns about COVID-19 by opening national and international borders. Before resuming passport applications on January 8, 2023, the Dragon Nation ruled out mandatory quarantine for inbound travelers.

According to a US official quoted by Reuters, the US government may introduce new measures to counter a perceived “lack of transparency” from Beijing.

US Treasury yields rose following the negative headlines surrounding the virus, in turn allowing the US Dollar Index (DXY) to regain upward momentum the day before. About the six major currencies, the US Dollar indicator had risen to around 104.20 as of the time of writing.

S&P 500 futures remain dovish, while benchmark Wall Street indices endured a mixed close amid these games. 10-year Treasury yields hit a six-week high the day before.

Market consensus for the November US Pending Home Sales report is up 0.6% from -4.6% in previous readings, brightening the calendar but unlikely to change the mood for the holidays.

GBP/USD price technical outlook: Bears teasing 1.2000

GBP/USD outlook

The GBP/USD price has bounced several times from the psychological support of 1.2000. The pair lie well below the key moving averages on the 4-hour chart. If the pair manages to break the 1.2000 level, the price may head to 1.1900 as the next target.

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On the flip side, closing above the 20-period SMA could trigger fresh upside momentum. The probability of such a move is thin as the market lacks impetus during the holidays.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.