Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2665.
- Add a stop-loss at 1.2750.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2720 and a take-profit at 1.2800.
- Add a stop-loss at 1.2650.
The GBP/USD exchange rate retreated sharply in the overnight session as US bond yields jumped after a weak auction. It tumbled to a low of 1.2710, much lower than this week’s high of 1.2800 as the US dollar index (DXY) jumped by almost 40 basis points to $105.
US bond yields jump
The main catalyst for the GBP/USD pair plunge was this week’s bond sales by the US government. An auction of $44 billion seven-year Treasury notes saw weak demand, with primary dealers buying just 17% of the offering.
It was the third weak US bond auction and is a sign that investors are getting jittery about the US debt. The total government debt has jumped to over $34.6 trillion this year and the figure is soaring by $1 trillion every three months.
The…
