Pound trades low against the greenback during the Tuesday morning Asian session. A jump in Treasury yields overnight as traders bet on an early Federal Reserve interest rate hike despite of the surging COVID-19 cases, favored the US dollar. The coronavirus fears in the UK and Brexit woes also underpins the bearish trend of the pair.

Yields on U.S. two-year notes that are sensitive to rate hike expectations, along with 5-year notes reached to their highest levels since March 2020. Benchmark U.S. 10-year and 5-year yields rose to six-week peaks. The U.S. central bank is likely to begin hiking interest rates by mid-2022 is the rationale behind the jump.

In UK, Corona virus cases has recently rose by around 158,000 infections. Despite a huge increase in coronavirus cases, the prime minister said the UK is in a better position than most other countries due to the “very, very high level of vaccination”. However, He also said “Omicron being “plainly milder” than other variants, the NHS is under pressure due to its high transmissibility.”

Elsewhere, Reuters’ tally mentioned, “COVID worries have been front and center once again for investors since the start of the holiday season. The number of new COVID-19 cases has doubled in the last seven days to an average of 418,000 a day, mostly attributed to the highly transmissible but milder Omicron variant.”

On the other hand, On Monday, the U.S. Food and Drug Administration authorized the use of a third dose of the Pfizer and BioNTech COVID-19 vaccine for children aged between 12 and 15 years, and narrowed the time for all booster shots to five months from six months after primary doses.

About Brexit woes, few of the new Brexit rules are active from the 2022 start and thus will challenge the movement of goods, which in turn tests the strained supply chain. And the Financial Times (FT) said, “Brexit customs checks later this year risk undermining the commercial ‘level playing field’ for UK regional ports, the body representing some of the country’s largest port operators has warned.”

GBP/USD 4 Hour Chart:

Support: 1.3426 (S1), 1.3377 (S2), 1.3324 (S3).

Resistance: 1.3529 (R1), 1.3582 (R2), 1.3631 (R3).

A jump in US Treasury yields along with the coronavirus fears in the UK and Brexit worries exerts downward pressure on GBP/USD. We expect a bearish for GBP/USD.