GBP/USD pressured to key support despite a crucial drop in US yields
FXStreet News

GBP/USD pressured to key support despite a crucial drop in US yields

  • GBP/USD is now pressured by bears at critical support.
  • DXY also meets a key  support level on the daily chart.  

At the time of writing, GBP/USD is trading  at 1.3736 between a range of 1.3718 and 1.3782 and around flat on the day.  

It is really more of a US dollar story than anything else on Thursday, with the markets soaking up the Federal Reserve’s commitment for lower for longer rates.  

In yesterday’s Federal Open Market Committee  minutes, various participants noted that changes in the path of policy should be based primarily on observed outcomes rather than forecasts.  

This has given rise to a topping in US yields with the benchmark 10-year Treasury yield  down by some 2.5% at the time of writing, off its lows of the day of 1.6280%.

Meanwhile, the US  dollar traded near its lowest in more than two weeks versus major peers, tracking Treasury yields lower.  

The dollar index  DXY  which measures the US  currency against a basket of six currencies extended its losses to a low of 91.999 after dipping as low as 92.134 on Wednesday for the first time since March 23.

Technical analysis, GBP/USD & DXY

Technically, the DXY is now at critical support which has enabled cable to  stabilize  a bit on broad dollar weakness.    

”Still, the break below $1.3765 sets up a test of the March 25 low near $1.3670,” analysts at Brown Brothers Harriman argued.

”While cable remains hostage to broad movements in the dollar, it traded today at a new low for this move near $1.3720 and is on track to test the March low near $1.3670 and then the February low near $1.3565.”

GBP/USD daily chart

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.