GBP/USD Video 08.03.21.
Traders Focus On Yields In Absence Of Economic News
GBP/USD is currently trying to settle back above the resistance at 1.3835 while the U.S. dollar is flat against a broad basket of currencies.
The U.S. Dollar Index is testing the nearest resistance level at 92.00. If this test is successful, the U.S. Dollar Index will head towards the next resistance level at 92.25 which will be bearish for GBP/USD.
There are no important economic reports scheduled to be published in the U.S. and UK today so foreign exchange market traders will focus on general market sentiment and U.S. government bond market.
Treasury yields remain close to multi-month highs after U.S. Senate passed the huge coronavirus aid package. The market is worried about inflation so traders sell Treasuries, pushing their yields higher.
Rising yields continue to provide support to the American currency, but it remains to be seen whether further upside in yields will be able to help U.S. dollar as the huge stimulus bill may ultimately serve as a bearish catalyst.
GBP/USD is testing the nearest resistance level at 1.3835. If GBP/USD manages to settle above this level, it will head towards the next resistance level at 1.3865. This resistance level has been recently tested and proved its strength.
In case GBP/USD settles above 1.3865, it will head towards the next resistance at the 20 EMA at 1.3900. A move above the 20 EMA will signal that GBP/USD will try to gain upside momentum. In addition, GBP/USD will have a good chance to settle back in the 1.3900 – 1.4000 range which will be a welcome development for GBP/USD bulls.
On the support side, the nearest support level for GBP/USD is located at the 50 EMA at 1.3800. If GBP/USD declines below the 50 EMA, it will move towards the support at 1.3780. A move below the support at 1.3780 will push GBP/USD towards the next support level which is located at 1.3745. Most likely, GBP/USD will get significant support from traders at this level as there was plenty of interest near 1.3745 back in January.
For a look at all of today’s economic events, check out our economic calendar.