GBP/USD recovers losses, treasury yields surrender gains

GBP/USD recovers from session lows.
Treasury yields retreat from multi-year highs.

Omkar Godbole FXStreet Contributor

GBP/USD found takers at the daily low of 1.3857 and moved higher to 1.3896, possibly due the 10-year treasury yield surrendering the daily gains.

As of writing, the spot is exchanging hands at 1.3890. The 10-year yield clocked a high of 2.67 percent; the highest level since July 2014 despite US government shutdown. However, the yield has backed off from the multi-year highs and was last seen trading largely unchanged on the day at 2.64 percent.

This seems to have put a bid under cable, despite Friday's disappointing UK retail sales release. So, is Pound set to test 1.40 soon? Kathy Lien from BK Asset Management says, "UK data has taken a turn for the worse with consumer price growth slowing year over year and retail sales taking a nosedive in the month of December. This does not bode well for next week's fourth-quarter GDP report as spending slowed in the last 3 months of the year."

Lien adds that Pound could slip to 1.37 if the UK wage growth numbers due this week disappoint expectations.

GBP/USD Technical Outlook

Jim Langlands from FXCharts prefers to buy the dips as the long run charts remain bullish.

Resistance		Support
1.4000	Psychological	1.3850	Minor
1.3975	Minor	1.3838	Friday low
1.3942/44	17 Jan high/Friday high	1.3825	Minor
1.3913	18 Jan high	1.3805	18 Jan low
1.3885	Minor	1.3756	17 Jan low

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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