GBP/USD has started to move sideways at the beginning of the week after failing to break above 1.3600 on Friday. The pair remains at the mercy of the greenback's market valuations and rising US Treasury bond yields suggest that GBP/USD could stage a downward correction in the near term.

The US December jobs report showed on Friday that Nonfarm Payrolls (NFP) rose by 199,000, falling short of the market expectation of 400,000. Although the dollar faced renewed selling pressure on this disappointing print, the benchmark 10-year US T-bond yield jumped to its strongest level since January 2020 near 1.8%. Market participants expect the Fed to stay on its tightening path on the stronger-than-expected wage inflation and the low unemployment rate.

Bullish setup of daily MA’s underpins the action, along with positive signal generated on Friday’s close above pivotal double-Fibo barriers at 1.3575/77 (38.2% of 1.4249/1.3161 descend and 61.8% retracement of 1.3834/1.3161 downleg), which looks for confirmation on repeated daily close above these levels.

Sustained break above 1.36 zone (round-figure / Nov 9 high) would open way towards 1.3675 (Fibo 76.4% of 1.3834/1.3161) and possibly unmask 200DMA (1.3736).

Weaker bullish momentum and stochastic entering overbought territory on daily chart, warn that bulls might be losing steam and consolidation may precede fresh push higher.

Initial support lays at 1.3553 (5/100DMA bull-cross) with extended dips to remain above broken daily cloud top (1.3514) to keep bulls intact.

GBPUSD Following up with the Bearish Channel

Jan 10 2022