GBP/USD Faces Bearish Pressure Amid Rising US Treasury Yields
GBP/USD Faces Bearish Pressure Amid Rising US Treasury Yields
The GBP/USD pair took a southern turn in the early European session, slipping below the 1.2100 mark after a tight range during the Asian trading hours near 1.2150. A risk-averse market sentiment coupled with surging US Treasury bond yields has given the US Dollar (USD) the upper hand on Thursday, making it challenging for the pair to shake off bearish pressure.
The benchmark 10-year US Treasury bond yield has been on a weekly rally, surging to its highest level since 2007, hovering near 5% on Thursday. Market attention now turns to Federal Reserve Chairman Jerome Powell, who is scheduled to speak before the Economic Club of New York later in the day.
Powell's remarks hold the key to the USD's direction. If Powell suggests that the rising bond yields could have a similar impact to an interest rate hike, the USD may weaken against its peers, potentially aiding GBP/USD in staging a rebound. Conversely, if Powell reiterates the need for another rate increase before year-end, it could boost the USD. A neutral tone from the chairman, emphasizing the data-driven approach to future policy tightening, could see the USD's valuation driven by risk perception.
As of the latest reports, US stock index futures were showing modest declines of between 0.1% and 0.2%. If escalating geopolitical tensions lead to safe-haven flows dominating the market later in the day, GBP/USD might face challenges in gaining traction.
From a technical perspective, our analysis suggests that GBP/USD is likely to continue on a bearish trajectory, with a new bearish impulse targeting 1.2050. The pair will need to navigate carefully through market headwinds to reverse the current bearish trend.
Short positions below 1.2180 with targets at 1.2050
The GBP/USD pair took a southern turn in the early European session, slipping below the 1.2100 mark after a tight range during the Asian trading hours near 1.2150. A risk-averse market sentiment coupled with surging US Treasury bond yields has given the US Dollar (USD) the upper hand on Thursday, making it challenging for the pair to shake off bearish pressure.
The benchmark 10-year US Treasury bond yield has been on a weekly rally, surging to its highest level since 2007, hovering near 5% on Thursday. Market attention now turns to Federal Reserve Chairman Jerome Powell, who is scheduled to speak before the Economic Club of New York later in the day.
Powell's remarks hold the key to the USD's direction. If Powell suggests that the rising bond yields could have a similar impact to an interest rate hike, the USD may weaken against its peers, potentially aiding GBP/USD in staging a rebound. Conversely, if Powell reiterates the need for another rate increase before year-end, it could boost the USD. A neutral tone from the chairman, emphasizing the data-driven approach to future policy tightening, could see the USD's valuation driven by risk perception.
As of the latest reports, US stock index futures were showing modest declines of between 0.1% and 0.2%. If escalating geopolitical tensions lead to safe-haven flows dominating the market later in the day, GBP/USD might face challenges in gaining traction.
From a technical perspective, our analysis suggests that GBP/USD is likely to continue on a bearish trajectory, with a new bearish impulse targeting 1.2050. The pair will need to navigate carefully through market headwinds to reverse the current bearish trend.
Short positions below 1.2180 with targets at 1.2050
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