GBP/USD drops to multi-day lows, further below 1.3800 mark amid stronger USD
- GBP/USD witnessed heavy selling on Tuesday amid a strong pickup in the USD demand.
- Surging US bond yields assisted the USD to recover further from the post-NFP swing lows.
- Technical selling below the 1.3800 mark aggravated the bearish pressure around the pair.
The intraday selling around the sterling picked up pace during the mid-European session and dragged the GBP/USD pair to three-day lows, around the 1.3770-65 region in the last hour.
Following a modest intraday uptick to the 1.3855 zone, the GBP/USD pair met with some fresh supply and turned lower for the second consecutive session on Tuesday. The downfall pulled the major further away from multi-week tops touched in reaction to Friday's dismal headline NFP print and was sponsored by a combination of factors.
The US dollar built on the previous day's modest gains and recovered further from one-month lows amid a strong follow-through positive move in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond surged past 1.36% amid expectations that the Fed could begin rolling back its pandemic-era stimulus in November.
On the other hand, the UK-EU stand-off on the way forward for the Northern Ireland Protocol might continue to act as a headwind for the British pound. This, in turn, was seen as another factor that contributed to the GBP/USD pair's intraday slide, taking along some short-term trading stops placed near the 1.3800 round-figure mark.
The mentioned handle coincided with the lower boundary of a short-term ascending channel extending from August swing lows. A convincing break below might have already set the stage for further losses amid absent relevant market-moving economic data. Hence, a subsequent fall towards the next relevant support, near the 1.3700 mark, looks like a distinct possibility.
Technical levels to watch