• GBP/USD has been recovering as the US dollar retreats alongside yields.
  • Biden's stimulus and an upcoming US auction will likely send the dollar back up.
  • Tuesday's four-hour chart is showing bears are still in the lead.

The royals have more damage control to do than GBP/USD bulls, who are able to lift their heads by staging a recovery. However, like the monarchy, the troubles are probably not over.

Cable has been benefiting from the dollar's descent. China intervened in markets to push bolster stocks and the ensuing risk-on mood is weighing on the safe-haven dollar. More importantly, investors are buying US bonds at lower prices, and the resulting fall in yields is pushing the greenback down as well.

Can this continue? 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 – better than the euro's – 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. 

All in all, while the pound has weathered the storm better than other currencies, it is far from immune to the next dollar surge. 

GBP/USD Technical Analysis

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. 

Immediate resistance awaits at 1.39, followed by 1.3915, where the 50 SMA hits the price. Beyond 1.3950, the recent high of 1.4015 is the next level to watch. 

Some support is at 1.3825, which provided support in mid-February, and then at 1.3775 and 1.3745. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD has lost its bullish momentum after having climbed above 1.0570 with the initial reaction to the US data in the American session and retreated toward the mid-1.0500s. On a weekly basis, the pair remains on track to close in positive territory. 


GBP/USD struggles to hold above 1.2300

GBP/USD struggles to hold above 1.2300

GBP/USD has edged lower following a jump above 1.2300 in the early American session on Friday. The market mood remains upbeat ahead of the weekend with Wall Street's main indexes posting strong daily gains on upbeat US data. 


Gold stays below $1,830 as US yields edge higher

Gold stays below $1,830 as US yields edge higher

Gold continues to fluctuate below $1,830 on Friday and looks to close the second straight week in negative territory. Fueled by the risk-positive market environment, the benchmark 10-year US Treasury bond yield is up more than 1% on the day, limiting XAU/USD's upside.

Gold News

Why Cardano could surprise over the weekend

Why Cardano could surprise over the weekend

ADA  set to close out the week with a gain on the workday trading week and over the weekend? Central banks signaled that the rate hike cycle is ending, meaning less stress and tight conditions for trading, opening up room for some upside potential with Cardano set to pop above $0.55 and test a significant cap.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!