GBP/USD retakes 1.34 handle
|- USD sell-off continues as treasury yields extend the post-Fed drop.
- GBP/USD tests 10-day MA of 1.3423.
GBP/USD has extended the post-Fed rally to 1.3423 (10-day MA) possibly due to fears that a potential delay in the tax reform could force the Fed to go slow with the rate hikes.
During the press conference, Fed chair. Yellen said that most policymakers factored fiscal stimulus (tax cuts) into their outlook. It essentially means the upward revision of the 2018 GDP forecast to 2.5 percent is based on the assumption that tax reform would be approved and shall yield desired results.
So, the Fed may revise its GDP and interest rates forecasts lower in the first quarter of 2018 should the tax reform is not approved or fails to have the desired results.
Consequently, the Treasury yields continue to lose altitude. As of writing, the 10-year yield is down close to 5 basis points at 2.356 percent. Thus, the USD is being offered across the board. The GBP/USD pair was last seen trading at 1.3410.
GBP/USD Technical Levels
A convincing move above 1.3423 (10-day MA) would open doors for 1.35 (zero levels) and 1.3520 (Dec. 8 high). On the downside, breach of support at 1.3355 (38.2% Fib R of Nov low-Dec high) could yield a pullback to 1.3311 (session low) and 1.33 (zero levels).
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