The GBP/USD price is up for the third straight day as US Treasury yields fall and as forex investors raise bets of a strong UK recovery. It is trading at 1.3845, which is 1.35% above the lowest level this week.
UK rebound hopes
The market is hopeful that the UK economy will have a swifter rebound this year as the government continues its vaccine rollout. It has already vaccinated more than 30 million people, almost half the population. It also expects to continue the process, with the goal of vaccinating all people in the next few months.
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The impact of this trend is being seen in the numbers. On Thursday, numbers by Markit revealed that the manufacturing sector continued to expand in March. The manufacturing PMI rose from 55.1 to 58.9 in March. This was better reading than the median estimate of 57.9.
It was also the fastest growth since 2011. While the UK manufacturing sector is a relatively small one, it helps to support the large services sector.
Other countries in Europe, Asia, and North America also recorded a stronger rebound. Indeed, the JP Morgan global manufacturing PMI number rose to a ten-year high of 55. This growth was supported by stronger output, new orders, and employment.
The GBP/USD also rallied because of the overall weaker dollar. The dollar index has dropped for the past three consecutive days as the market digests the latest $2.3 trillion infrastructure package proposal and the falling US Treasury yields. The 10-year Treasury yield has dropped from the 16-month high of 1.74% to 1.67%. The 10-year yield has also fallen to 2.334%.
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GBP/USD technical forecast
The GBP/USD price rallied to 1.3845, which is substantially higher than last week’s low of 1.3670. On the four-hour chart, the price is at the same level as the March 29 high. It has also moved above the 25-day and 15-day exponential moving averages (EMA) and the Ichimoku cloud. The Relative Strength Index (RSI) has also moved from last week’s low of 23 to 63.
Therefore, the pair may keep rising as bulls target the first resistance level of standard pivots at 1.3890. On the flip side, a drop below the pivot point at 1.3780 will invalidate this trend.