Mario Blascak, PhD
Independent Analyst
- GBP/USD is trapped in the downward sloping trend as BoE´s rate hike willingness eases and the US Treasury yields rise above the key psychological level of 3.0%
- Technically GBP/USD target 1.3750, representing 38.2% Fibonacci retracement of a big move from 1.3700 to 1.4377.
The GBP/USD is trading below the key support line of 1.3970 and with the US benchmark Treasury yields finally settling above 3.0% psychological mark the currency pair is set to fall further towards 1.3900-1.3800 before facing another technical hurdle of 1.3750.
There are no major macro data scheduled for the UK or the US on Wednesday so the market sentiment is likely to be driven by the moves of the US Treasury yields that support the US Dollar broadly.
On the political front, the UK Prime Minister Theresa May is facing increased pressure from the House of Lords and House of Commons that prefer the UK to stay within the customs union with EU after Brexit. Such stance is not acceptable for the Tory Party hardlines that consider the absolute separation from the EU the primary goal of Brexit.
The situations remind me the famous duet of Freddie Mercury and David Bowie singing Under Pressure:
Pressure pushing down on May
Pressing down on her no Brexiteer asks for
Under pressure... that burns a building down
Splits a Tory Party in two
Puts people on streets
It's the terror of knowing
What this world is about
Watching some good friends
Screaming `let me out'
Pray tomorrow... gets me higher
Pressure on people... people on streets…
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