The GBP/USD remains under pressure as the USD demand remains strong on Wednesday.
Investors are getting rid of risky assets such as stocks and bonds and are flocking to the USD as the Fed is expected to increase interest rates at least three times in 2018.
GBP/USD is threatening to break to 2018 lows.
The GBP/USD pair is trading at 1.3461 down 0.32% as the US Dollar is being well supported even with the US Treasury yields easing off 2011 highs on Wednesday.
In the early European session, the pair found an intraday ceiling at 1.3520 and then fell about 50 pips. Cable is hovering near 2018 lows a the time of writing.
The 10-year US Treasury is consolidating its strong advance on Wednesday while the US Dollar Index (DXY) which measures the greenback versus a basket of currencies is continuing the strong up move seen in the last two days. DXY is trading above the 93.50 mark
Meanwhile, the US Census Bureau and the US Department of Housing and Urban Development just released the new residential construction statistics for April 2018. The US housing starts came below expectations at 1.287M versus 1.31M expected while the US building permits came better-than-expected at 1.352M against 1.35M expected. In terms of percentage change, the US housing starts fell -3.7% m/m while building permits fell -1.8% m/m. However, the low-tier data had no significant effect on the GBP/USD as the pair is mainly driven by the activity in the US Treasuries.
Looking back, GBP/USD fell more than 150 pips on Tuesday on the back of strong USD demand. The 10-year Treasury yield benchmark reached 3.095% on Tuesday reaching levels not seen since summer 2011. Investors are dumping stocks, bonds and gold to get their hands on USD as the market is expecting the Federal Reserve Bank to hike rates three to four times in 2018. Investors consider holding cash a safer investment than stocks, bonds or the non-yielding asset gold.
GBP/USD 4-hour chart
The trend is bearish and support is seen a. To the upside, bulls should expect resistance at the 1.3550 supply level and the 1.3600 figure. The market is trading below its 50, 100 and 200-period simple moving averages on the 4-hour time-frame suggesting strong downward momentum.
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