GBP/USD to edge lower on another surge in yields

GBP/USD has been retreating from the highs as US yields resume their gains. Britain's upbeat data and vaccine situation may help it weather the storm, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“President Joe Biden signed the coronavirus relief bill into law and raised expectations by setting a target that every American could get a COVID'-19 vaccine from early May. The US has reached nearly 20% of its population while the UK is already roughly at 35% – but Britain has barely inoculated people with the second dose.”

“Apart from ramping up its vaccination campaign, upbeat data is also boosting the greenback. Jobless claims beat estimates with a fall to 712,000 in the week ending March 5, and the University of Michigan's Consumer Sentiment Index is forecast to show a minor increase in confidence.” 

“The pound has shown strength, but the main driver remains US bond yields. Returns on ten-year Treasuries edged up to 1.60%, a level seen as critical to dollar strength while a drop under 1.50% tended to push the greenback lower.”

“Support awaits at 1.3850, a support line from mid-March, and the 1.3830, a cushion from mid-February. The critical line to watch is 1.3775, March's trough.” 

“Some resistance awaits at 1.3925 followed by 1.3950, which is where the 100 SMA hits the price. It is followed by the psychological barrier of 1.40.”