- GBP/USD pierces the yearly top in a two-day run-up.
- US dollar fails to cheer the upbeat US Treasury yields amid risk-on mood.
- Reflation, tapering fears consolidate ahead of the key US NFP.
- UK Manufacturing PMI, Brexit headlines and US ISM Manufacturing PMI will be eye during the day.
GBP/USD extends the upward trajectory towards the fresh high in over three years while taking the bids around 1.4248, up 0.14% intraday, during early Tuesday. The cable broadly benefits from the US dollar weakness as well as optimism surrounding the UK’s gradual unlock by the press time.
With the return of full markets after a long weekend, traders cheer the receding odds of the Fed’s action, despite Friday’s strong US inflation figures, as well as increasingly upbeat British economic outlook. Also behind the run-up could be the BOE’s readiness for tapering versus the Fed’s repeated rejection of the same action.
That said, the US 10-year Treasury yields begin the trading with 2.1 basis points (bps) of upside around 1.61%, which in turn portrays the market’s upbeat sentiment and recedes the US dollar’s safe-haven demand.
Against these backdrops, the US dollar index (DXY) drops for the second consecutive day, down 0.11% intraday, after declining for the two straight months last.
It should, however, be noted that the Brexit jitters and cautious sentiment ahead of the US ISM Manufacturing PMI for May probe GBP/USD bulls near the multi-month top.
Moving on, market players will keep their eyes on the risk catalysts and the US dollar moves ahead of the US ISM data. In the meantime, the UK Manufacturing PMI for May, expected to confirm 61.9 initial forecast, may entertain traders.
Read: ISM Manufacturing PMI Preview: NFP Hint? Inflation component to steal the show, rock the dollar
Technical analysis
Unless the quote drops back below 1.4220 immediate support, GBP/USD remains directed towards 2018 tops near 1.4375.