GBP/USD consolidates losses, holds above weekly lows
- Cable retreats after short-lived recovery.
- DXY ends at monthly highs supports by higher US yields.
The GBP/USD pair dropped on Wednesday and erased the gains of the previous day. The pair remains near 1-month lows still facing pressure.
A stronger US Dollar pushed again GBP/USD to the downside. Higher US yields continue to support the greenback. The DXY hit monthly highs as the 10-year yield reached levels on top of 3% for the first time since 2014. The bond market remains the key driver of recent price action.
Cable lost momentum after approaching 1.4000 and turned to the downside. Since then it has been moving with a bearish bias and bottomed at 1.3922 on American hours. During the last hours, it has been hovering around 1.3935, consolidating daily losses (around 40 pips), however holding above the weekly low reached yesterday at 1.3916.
Investors await UK and US GDP data due on Friday. In the UK, GDP growth during the first quarter is expected to rise 0.4% over the quarter and 1.4% over the year. Consensus forecast sees Q1 US GDP slowing to 2.3% from 2.9% of 2017 Q4.
Technical outlook
“The 4 hours chart shows that the 20 SMA acted as a dynamic resistance a couple of times through the day, currently at 1.3966. The Momentum indicator has managed to recover up to its mid-line, but remains below it while the RSI hovers around 33, limiting chances of a firmer recovery”, said Valeria Bednarik, Chief Analyst at FXStreet.
Below 1.3920, the decline could continue toward 1.3770, the next big static support according to Bednarik.