The pair will likely have a bearish breakout as bears target the next key support at 1.2950.
Bearish View
- Set a sell-stop at 1.3000 and a take-profit at 1.2900.
- Add a stop-loss at 1.3060.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.3025 and a take-profit at 1.3100.
- Add a stop-loss at 1.2950.
The GBP/USD price remained close to its lowest level this month as the strength of the US dollar continued. The pair is trading at 1.300, which was slightly above last week’s low at 1.2976. It has dropped by almost 1% from its highest level this month.
US Bond Yields
The GBP/USD pair is trading close to its lowest level this month as investors focus on the bond market. US bond yields continued rising as the bank earnings season continued. Last week, JP Morgan, the biggest bank in the US published weak results as its investment banking division deteriorated. On Monday, Bank of America published modest results as its net interest margin expanded.
The yields of the 10-, 5-year, and 2-year all rose to the highest levels as investors predicted that the Federal Reserve will be more aggressive in the coming months.
These results came as signs emerged that the Chinese economy was starting to slow. Data published on Monday revealed that the economy had a stronger-than-expected first quarter. It expanded by 1.3% in Q1, which was better than the expected. The economy also expanded by 4.8% on a year-on-year basis.
However, with the country maintaining its Covid zero strategy, there are signs that the economy is slowing, Retail sales declined by 3.5% in March after rising by 6.7%. This decline was worse than the median target of -1.6%. Other sectors of the economy are also showing signs of slowing down.
The economic calendar will have no events from the UK on Tuesday. The only important data will be the latest US building permits and housing starts. Economist expect the data to show that the two numbers declined slightly in March as the cost of homes rose.
GBP/USD Forecast
The GBP/USD pair has been in a downward trend in the past few weeks. The pair is hovering slightly above the key support at 1.3000. It is also trading at the same point as the 25-day and 50-day moving averages. It has also dropped slightly below the Ichimoku cloud, which is also a bearish sign.
Therefore, the pair will likely have a bearish breakout as bears target the next key support at 1.2950. A move above the resistance at 1.3050 will invalidate this view.
