The GBP/USD is wavering today as investors continue watching the Treasury yield market. The GBPUSD is trading at 1.3840, which is slightly above yesterday’s low of 1.3800.
What happened: Unlike most currency pairs, the GBP/USD was relatively stable yesterday. For one, the EUR/USD dropped to the lowest level since November while the Japanese yen and Swiss franc declined to the lowest level since June last year.
This price action is mostly because of the rising Gilts and US Treasury yields. Today, however, the two yields have erased some of the yesterday’s gains.
Today, there is no major scheduled economic numbers from the UK and the US. Instead, investors will be focusing on the bond market ahead of the important US consumer price index data that will come out tomorrow. Economists expect the data to show that consumer prices rebounded in February, helped by stimulus spending and high crude oil prices.
GBP/USD price forecast
The four-hour chart shows that the GBP/USD pair has dropped by almost 3% from its highest level this year. Also, the pair has formed a head and shoulders pattern, which is usually a bearish signal. In the past few hours, it has formed a bearish pennant pattern. Therefore, in my view, the pair will likely break-out lower as bears target the next key support level at 1.3700. However, a rise to 1.3900 will invalidate this price action.