GBP/USD Sheds Intraday Losses Under 1.3200 as Cautious Optimism Takes Root; Bond Yields, Ukraine Under Watch

More Bids for the Pair

The GBP/USD currency pair picked up bids so it could consolidate on its daily series of losses in the vicinity of 1.3165 in the course of the second day with a negative trend while Tuesday’s European session went on.

The pair’s most recent recovery might be connected with the retreat experienced in the US Treasury bond yields and comments that came from the Chancellor of the United Kingdom, Rishi Sunak. The United Kingdom’s Sunak had said that the continuous level of uncertainty created by events makes it more expedient than ever before that the government takes responsible approaches in the issue of public finance.

GBP/USD price chart. Source TradingView

In the United States, on the other hand, the American ten-year and the two-year Treasury bond yields have both risen to a new high level for the first time since May 2019 in the course of the Asian session before they eased to 2.32% and 2.16% respectively.

Ukraine War Still Weighing Quite Heavily

Another factor equally posing a challenge to GBP/USD bearish traders is the latest round of optimism in the market as a result of the news emanating from Eastern Europe over Russia and Ukraine. This optimism goes further to be favorable to the FTSE 100 and Euro Stoxx 50 future to be able to record relative gains while it equally shoved the US dollar index away from the daily top it was.

Among the statements that calmed the market was one from the Ukrainian President, Volodymyr Zelenskyy, who reiterated that Ukraine was no longer seeking membership in the North Atlantic Treaty Organization and he displayed a readiness to discuss that commitment with Russia and other negotiators. Furthermore, the ability of Russia to pay another installment of its Eurobond coupons has favored the general market sentiment and it aided the rebound of the GBP/USD pair.

But recent comments from the United Kingdom’s House of Lord’s sub-committee on Brexit and accompanying protocols posed a challenge to the pair’s recovery movement. A committee in the House of Lords has warned that both the United Kingdom and the European Union have to do more so they can explain how the updates in EU laws could be of impact to Northern Ireland.

Importantly, bets in the money markets have been favoring a 50 basis points interest rate increase by the United States Federal Reserve in its policy meeting scheduled for May and up to 190 basis points in interest rates by the year’s end. This also poses a different level of challenge to the GBP/USD currency pair.