GBP/USD Price Marching to 1.36 as Yields Drop, Eying Fed/BOE

• A weaker US dollar boosts GBP/USD prices over the past two days.
• Inflation concerns dampen yields from a 2.5-year high.
• A mini-shuffle by British Prime Minister Johnson indicates a break in the Brexit impasse, while the UK PAC criticizes Brexit.

The GBP/USD price continues its recovery from yesterday’s lows towards 1.3600 early Wednesday morning in Europe. However, as of press time, the cable pair supports the US dollar’s weakness, pushing prices to 1.3560.

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US Treasury yields declined from a multi-day high hit the previous day. As a result, the US Dollar Index (DXY) posted its biggest daily loss of the week with a 0.12% decline to 95.50.

Yesterday, the US 10-year Treasury yield spiked to its highest level since July 2019 before slipping to 1.945%. Even after San Francisco Fed Chair Mary Daly supported a rate hike in March in her most recent speech, the bond coupon has shrunk. Furthermore, the policymaker noted that “the Fed cannot raise rates excessively,” while also saying that “US inflation could get worse before it gets better.”

Johnson’s cabinet reshuffle, however, has raised doubts about his political power, even though Brexit should actually progress more quickly. The British Prime Minister has entrusted Jacob Rees-Mogg with realizing the benefits of Brexit in a mini-minority of ministers who have sought to boost support for the British Prime Minister within the ruling Conservative Party.

Reports from the UK’s Public Accounts Committee (PAC) discuss the problems caused by Brexit. According to the report, Brexit has had a ‘significant impact’ on UK trade volumes, and new border deals have increased ‘costs’ for UK companies.

It is important to note that “the first weekly drop in deaths caused by Coronavirus (in England and Wales) this year” is encouraging for shoppers, as reported by The Guardian.

The GBP/USD market will be paying close attention to comments from the Bank of England and Fed policymakers as inflation is a hot topic. The cable pair may see a pullback if BOE’s Phill fails to convince markets of the recent rate hike.

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GBP/USD price technical analysis: Bulls still shying

The GBP/USD price manages to jump above the 20-period SMA on the 4-hour chart. However, the price structure does not look promising for the bulls as the price bars have a low spread and close around the middle. In addition, the average daily range is 41% which is higher than usual. Meanwhile, volume data does not provide any clues for the upside. Hence, the price is expected to stay within the 1.3500 to 1.3600 range.

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