Tuesday, January 6, 2015

Relative strength in the Treasury yield drags down $GBP/USD

The selling in the $GBP/USD pair intensified ahead of the US session as the benchmark bond yield in the UK continues to tank on weak economic data and global cues.

The weakness is being driven by the 10-year bond yield spread which tilts in favor of the US dollar. The 10-yr Treasury yield in the US is down 6.7 basis points to 1.97%, while its UK counterpart has lost 8.8 basis points to trade at 1.584%. 

The pair now trades 0.49% lower for the day at 1.5177. The Pound came under pressure earlier today after the UK Services PMI in December expanded at the slowest rate in 19 months; printing at 55.8, missing the estimate of 58.5. 

$GBP/USD Technical Levels

The pair has an immediate support located at 1.5114 (Aug 2013 low), under which losses could be extended to 1.5050 levels. Meanwhile, resistance is seen at 1.5200 and 1.5249 levels.