GBP/USD struggles below 1.3750 amid USD comeback

• GBP/USD remains vulnerable below the 1.3750 level, faces multiple rejections here.
• US Treasury yields rise,  boosting the demand for the US dollar.
• Risk-off mood also benefits the dollar’s attractiveness.

The GBP/USD pair edges lower in the Asian session. The pair has been moving in a very narrow trade band of 1.3750-35. After peaking at the high of 1.3756, the pair was last seen trading at 1.3739, down 0.01% on the day.

The overnight gains in the US Treasury yields lift the demand for the US dollar. The 10-year yields traded between a range of 1.68% and 1.64% during the New York session. The US Dollar Index (DXY) recovers some of Monday’s losses and trades near the 92.20 level.

The prospects of faster US economic growth fueled by a massive government stimulus package and rapid rollout of vaccination continue to boost the demand for the greenback. Boston Fed President Eric Rosengren said that the US economy could see a significant rebound this year owing to accommodative monetary and fiscal policy, but the job market still faces weakness.

On the other hand, the UK economy shows some signs of resilience as the Halifax house price index rose to 6.5% Y-o-Y basis in March. The partial reopening of the economy on Monday helped the sterling to gain against the greenback. However, the rally fizzled out sooner than expected.

As for now, traders are looking for the important data releases which include the UK Balance of Trade FEB, Construction output YoY FEB, and GDP 3-month Avg, and from the US, the important Core Inflation and Inflation rate. The pair is looking for some fresh impetus to trade with some meaningful traction.

GBP/USD: Technical levels