- 10Y and 2Y US-UK yield differential rises in the GBP-negative manner despite upbeat UK GDP reading.
- GBP/USD fell to 1.3147 on Thursday and extended losses to 1.3113 in the Asian session today.
- The daily chart shows a symmetrical triangle pattern.
GBP/USD failed to capitalize on the Wednesday's bullish outside day candle yesterday as the bond yield differential turned a blind eye towards upbeat UK GDP reading and continued to rise in the GBP-negative manner.
Symmetrical triangle on the daily chart
The sell-off from the Sep. 20 high of 1.3657 ran out of steam at 1.3027 (Oct. 10 low). Since then the pair has moved in the sideways manner, setting higher lows and lower highs pattern i.e. symmetrical triangle formation.
A bearish breakdown (a break below triangle support of 1.3113) would signal continuation of the bearish move from 1.3657.
US-UK Yield differential continues to rise
Currently, the 2Y US-UK yield differential stands at 115 basis points; highest level since Sep. 1. Meanwhile, the 10Y US-UK yield differential hovers at 6-1/2 week high of 107 basis points. The yield spread is likely to rise further if the preliminary US Q3 GDP reading prints higher than expected, in which case the GBP/USD could suffer a bearish symmetrical triangle breakdown. On the other hand, a weaker-than-expected US GDP reading would help Cable regain poise.
GBP/USD Technical Levels
An end of the day close below 1.3113 would open doors for a sustained move lower to 1.30 (psychological level). A break lower could force bulls to unwind their shorts leading to a much deeper drop to 1.2839 (200-day MA). On the higher side, a move above 1.3162 (Asian session high) could yield 1.3189 (1-hour 200-MA) and 1.32 (zero levels).
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.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.