- Widespread USD weakness helped GBP / USD gain positive traction on Tuesday.
- The fall in US bond yields led to some profit-taking in US dollars.
- The lack of strong buying tracking warrants caution before placing bullish bets.
The pair GBP/USD it maintained its offered tone during the middle of the European session, although it has fallen around 30 pips from the daily highs near 1.3900.
The pair gained some positive traction on Tuesday and finally broke a consolidated trading range held for the last 36 hours or so. The momentum pushed the GBP / USD pair further away from the month-long lows hit on Friday and was solely sponsored by widespread weakness in the US dollar.
Expectations that the Fed will take some action to curb the rapid rise in the cost of long-term borrowing caused a sharp pullback in US Treasury yields This, in turn, led to bulls. the USD to remove some gains from the table and provided a modest intraday rally to the GBP / USD pair.
That said, the prospects for a relatively faster US economic recovery helped limit deeper losses for the dollar. Investors remain optimistic about the US economic outlook amid the impressive pace of COVID-19 vaccines and the passage of the highly anticipated $ 1.9 trillion stimulus package.
This, in turn, could limit the upside for GBP / USD and therefore warrants caution by aggressive bull traders. In the absence of major economic releases to move the market, it will be wise to wait for some solid follow-up purchases before positioning yourself for more profit.
Even from a technical perspective, the inability of the GBP / USD pair to capitalize on the move and the failure near 1.3900 favors bearish traders. The subsequent weakness below 1.3850 will add credibility to the negative outlook and pave the way for an extension of the recent corrective slide.
Technical levels
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