GBP/USD Price Drops to 1.37, Remains Rangebound Ahead of US Data

• GBP/USD falls to the 1.3700 area but finds support to rise around 40 pips.
• Demand for the USD gains amid a slight shift in the risk sentiment.
• US 10-year yields have dropped below 1.60% amid uncertainty about the tapering schedule.
• All eyes are now on UK budget and US durable goods orders.

The GBP/USD price experienced strong selling in the early European session, falling to 1.5-week lows in the 1.3700 area.

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The GBP/USD pair encountered a new resource on Wednesday after consolidating briefly in the first half of trading. The pair then continued its decline from the 1.3825-30 resistance zone of the previous day. In intraday declines in equity markets, a shift in risk sentiment supported the safe dollar. This, in turn, was seen as a key factor contributing to a decline in the major currency.

Meanwhile, tensions between Britain and France over fishing rights and the Northern Ireland Protocol concern have hurt the British pound. In conjunction with this, the pound was put under pressure by a good rebound in the EUR/GBP cross. The downturn on Wednesday could continue to be attributed to technical selling on a sustained break below the short-term support of the uptrend channel.

Amidst uncertainty regarding the timing of the Fed’s tightening of monetary policy, the demand to reduce risk in the markets drove yields on US Treasury securities lower. As a result, the yield on the US 10-year Treasury fell for the fourth day in a row, shattering the 1.60% threshold. Therefore, the dollar bulls were prevented from making aggressive bets, which resulted in lower losses for the pair, at least for now.

Rishi Sunak, the UK Treasury Secretary, is now expected to announce the annual UK budget. In addition, after the start of North American trading hours, traders will be able to find fresh opportunities after the release of durable goods orders data in the United States. These factors, coupled with US bond yields and broader market risk sentiment, will affect US dollar price movements and create significant trading opportunities for the GBP/USD pair.

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GBP/USD price technical analysis: 1.3700 to hold

The GBP/USD price fell sharply towards the 1.3700 area but found the due support around the round number and gained nearly 40 pips. The price is still below the 20-period and 50-period SMAs, which can hurdle the recent upside correction. The next hurdle can be the triple top at 1.3835. On the flip side, immediate support is 1.3700 ahead of 100-period and 200-period SMAs in the 1.3685-95 zone. The further downside may target the 1.3660 area. The volume data still favors the downside. So, it is prudent to watch the key levels before entering a trade.