The pound is trading downside against the greenback on Monday. The sterling seems to be under pressure mainly due to the renewed strength in the US Dollar Index (DXY). The US Treasury yields has seen some recent pullback and are trading near 1.66%, which offers a boost to the US dollar.

Whereas, Asian shares became weak on Monday as investors wait to see if U.S. earnings can justify sky-high valuations, while bond markets could be tested by what should be very strong readings for U.S. inflation and retail sales this week.

There was a rise in the US 10-year rates due to the anticipated inflation which helped the US dollar to gain as an attractive investment.

Early Monday, The Federal Reserve Chair Jerome Powell said that the US economy was ready to move but not moving for a stronger recovery COVID-19 remains a threat. The economy is at an “inflection point”, with accelerated output and job growth owing to the government’s support measures and a rapid vaccination program. 

On the other hand, Data wise, the UK published on Friday, March Halifax House Prices, which were up 6.5% in the three months to March. The economy of UK showed signs of recovery but slow pace of vaccination due to the AstraZeneca coronavirus vaccine issues effected the recovery speed. The UK vaccine rollout with the shot was considered successful until concerns related to blood clots arose, leading to a slowing pace of vaccination.

Another factor weighing on pound is the effects of Brexit in Northern Ireland. The protocol agreed after the UK’s departure from the Union has resulted in trade barriers between Britain and Northern Ireland. Unionist riots have been hitting the area since late March, escalating as time goes by.

GBP/USD 4 Hour Chart:

Support: 1.3664 (S1), 1.3627 (S2), 1.3584 (S3).

Resistance: 1.3745 (R1), 1.3788 (R2), 1.3825 (R3).

All the catalysts favors greenback against the pound. We expect a bearish trend for GBP/USD.