GBP/USD rebounds from 1.3330 and erases losses despite higher US yields
- DXY drops back to 93.00.
- Spot erased losses and rebounds toward 1.3400.
- US House of Representatives passes tax reform bill that goes to the Senate.
The GBP/USD pair rebounded from 1.3329 and climbed to 1.3383 during the American session. At the moment of writing, it was trading at 1.3380 at the same level it closed yesterday.
The move to the upside came amid a slide of the US dollar. The DXY dropped from 93.20 to 92.98, hitting a fresh low. It dropped despite rising US yields. The 10-year yields jumped above 2.40% to 2.46%, the highest level since October 27.
The House of Representatives approved the tax bill (227 - 203). Now the bill goes to the Senate that is expected to vote later today. If it passes, the bill will ready to be signed by President Trump before Christmas holiday. The US dollar was unaffected by the vote and remained near session lows against the pound and the euro, and even pulled back versus the yen.
GBP/USD Technical outlook
“The pair heads into the Asian opening with an increasing upward potential in the short term, having bounced from its 200 EMA, flat around the mentioned low in the 4 hours chart, and now aiming to surpass a bearish 20 SMA”, said Valeria Bednarik, Chief Analyst at FXStreet.
She warns that technical indicators in 5 hours chart fail to support a downward extension, as the Momentum maintains a positive stance while the RSI turned higher, currently at 50, rather supporting additional gains for the upcoming sessions. “The pair keeps trading inside a descendant channel, with a critical support around 1.3300, where buying interest has been surging this month”, added Bednarik.