GBP/USD Forecast: Pound at the mercy of bond buyers, bears ready to take over

GBP/USD has been holding onto its recovery as US yields remain off the highs.
A critical US Treasury auction and inflation figures are set to move markets.
Wednesday's four-hour chart is showing bears are in the lead.

Yohay Elam FXStreet

"Trust your gut" – the words of former Good Morning Britain's Piers Morgan regarding the royal scandal are controversial but may resonate with many cable traders that follow their instincts when the technical picture is murky like now. However, fundamentals provide a clearer path of action that requires no reliance on inner organs.

US Treasury yields remain the overwhelming driver of the dollar and all currency pairs including the greenback. The next move for ten-year bonds – the global benchmark – heavily depends on Wednesday's auction of such debt. With yields hovering around 1.55% at the time of writing, it would be fair to say that a climb above 1.60% is dollar positive and a drop under 1.50% is adverse for the greenback.

US 10-Year Treasury Auction: Interest rates return to center stage

Ahead of that fateful offering of debt, the House is set to give the green light to additional government expenditure. The lower chamber is set to pass the Senate's modified version of President Joe Biden's $1.9 trillion covid relief package. After he signs it into law, the funds are set to flow to states, municipalities, the unemployed, and households via stimulus checks.

Earlier on, an updated view on inflation is eyed. The Consumer Price Index probably edged higher in February, albeit not to alarming levels. Any uptick in inflation may support the greenback.

US CPI February Preview: A perfect storm in the making?

What about the British side of the equation? While UK papers are all covering the royals, the vaccination campaign continues at full force and keeps supporting sterling. However, cable's main driver remains the dollar.

GBP/USD Technical Analysis

Momentum on the four-hour chart has turned positive and the currency pair has settled above the 200 Simple Moving Average. However, it remains capped by the 50 and 100 SMAs. All in all, the picture is mixed.

Support awaits at 1.3850, where the 200 SMA meets the daily low. It is closely followed by 1.3830, a cushion from February, and by 1.3775, March's low.

Immediate resistance awaits at 1.39, the daily high, followed by the weekly top of 1.3925, and the 100 SMA at 1.3950.

GBP/USD Price Forecast 2021: Cable braces for calendar comeback amid three exits

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD flirts with weekly highs in the Fed's aftermath

GBP/USD reversed early losses following the Federal Reserve decision to keep rates on hold and neared the 1.3360 level before shedding some ground. Focus shifts to Governor Kevin Warsh's speech, while the Bank of England will announce its monetary policy decision on Thursday.

EUR/USD extends rally pass 1.1450 on Fed's Warsh

EUR/USD trades at fresh weekly highs above 1.1450, following the Federal Reserve monetary policy decision to keep interest rates on hold. The statement showed policymakers remain confident in economic progress while blaming inflation on energy prices. The divided vote among officials put in doubt a September hike, leading to sharp US Dollar losses.

Gold hovers around $4,100 as Fed decision hits the USD

Gold surged following the Federal Reserve's decision to keep the benchmark interest rate unchanged at 3.50%-3.75%. Policymakers noted that inflation remains elevated and that economic activity is expanding at a solid pace despite elevated uncertainty, spurring doubts about a rate hike in September. XAU/USD peaked above $4,100, now battling to retain the level.

No soft target: Warsh vows to return inflation to 2%

The Fed left interest rates unchanged at 3.50%-3.75%, but the decision carried a distinctly hawkish edge as three officials voted for an immediate 25-basis-point increase. Chair Kevin Warsh reinforced that message, insisting there was no tolerance for a softer inflation target and warning that the Fed would not hesitate to act.

How the CLARITY Act unlocks Wall Street’s tokenization pipeline

The United States (US) Digital Asset Market Clarity Act (CLARITY Act), awaiting a full Senate floor vote, promises to unlock Wall Street’s potential to tokenize financial assets, including equities, US Treasuries, private credit, real estate and commodities at a scale that could supercharge the real-world asset (RWA) market from the current $17 billion level to $5.5 trillion by 2030, according to

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.