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GBP/USD has been recovering as the US dollar retreats alongside yields. Bulls need to surpass 1.3950 to get out of the woods which is unlikely as Biden’s stimulus and an upcoming US auction will likely send the dollar back up, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“The US House of Representatives is on course to pass the Senate’s version of the covid relief bill – worth around $1.9 trillion. President Joe Biden will then sign it into law, launching vast government expenditure that means more debt issuance and potentially rising returns on Treasuries.”  

“The US is auctioning three-year bonds on Tuesday and ten-year Treasuries on Wednesday – with the latter closely followed by markets. A higher return may trigger the next leg up for the greenback and end the current calm.”  

“Sterling has been able to put up a fight thanks to Britain’s vaccination campaign and also relatively hawkish comments from the Bank of England. Governor Andrew Bailey reiterated that negative rates are basically off the agenda.”

“Bulls are eyeing 1.3950, which is where the 100 Simple Moving Average hits has been converging with the price in recent days – and it also capped cable in mid-February. By reaching 1.3950, momentum would likely turn positive. At the moment, it is still to the downside and GBP/USD trades below the 50 SMA and only above the 200 SMA.”