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  • Sustained USD selling, upbeat UK jobs report pushed GBP/USD to multi-week tops on Tuesday.
  • Rebounding US bond yields extended some support to the USD and capped gains for the major.

The GBP/USD pair retreated around 25 pips from daily swing highs and was last seen hovering in the neutral territory, around the 1.3985-90 region.

The pair added to the previous day’s massive rally of over 180 pips and edged higher during the first half of the trading action on Tuesday. The uptick pushed the pair to the highest level since early March and was supported by the prevalent bearish sentiment surrounding the US dollar. Bulls, however, struggled to capitalize on the move, or find acceptance above the key 1.4000 psychological mark

The USD dropped to six-week lows amid speculations that the Fed will keep interest rates near zero levels for a longer period. This, along with mostly upbeat UK monthly employment details, provided an additional boost to the GBP/USD pair and remained supportive. That said, a combination of factors extended some support to the USD and capped any further gains for the GBP/USD pair, at least for now.

A goodish pickup in the US Treasury bond yields helped ease the USD bearish pressure. This, along with a turnaround in the US equity futures, further underpinned the greenback’s relative safe-haven status against its British counterpart. The downside, however, remains cushioned amid optimism over the successful coronavirus vaccination campaign in the UK and the gradual reopening of the economy.

This makes it prudent to wait for some strong follow-through selling before confirming that the recent strong move up from the 100-day SMA support has run out of steam. Hence, any meaningful pullback might still be seen as an opportunity to initiate fresh bullish positions around the GBP/USD pair amid absent relevant market-moving US economic releases on Tuesday.

Technical levels to watch