GBP/USD falls below 1.3700 mark amid stronger USD, risk-off mood
- GBP/USD remains cautious near the 1.3700 mark.
- US Treasury yields trade higher which supports USD.
- Negative equities point towards risk-off sentiment among investors.
The GBP/USD pair is trading on the back foot below 1.3700 in the Asian trading session. The pair expects to continue with the previous week’s negative tone where it fell from the weekly highs of 1.3915 and touched the weekly lows of 1.3671.
At the time of writing, GBP/USD is trading at 1.3689, down 0.13% on the day.
The renewed strength in the US Dollar Index (DXY) is the driving force behind the pair’s submissive performance. The US Treasury yields witness some pullback and are trading near 1.66%, offering a boost to the US dollar.
The Federal Reserve Chair Jerome Powell early Monday said that the US economy was poised for a stronger recovery COVID-19 remains a threat. The economy is at an “inflection point”, with accelerated output and job growth owing to the government’s support measures and a rapid vaccination program. The US 10-year rates rose on the anticipated inflation and, thus, helping the US dollar to gain as an attractive investment.
On the other hand, the UK economy showed some signs of recovery but the slower vaccination pace, after a good start, could hamper the path of turnaround. The growth differentials between the UK and the US keep the pound on the defensive.
GBP/USD technical levels