GBP/USD bulls capped at 1.2596 with pick-up in US yields

Currently, GBP/USD is trading at 1.2561, up 0.30% on the day, having posted a daily high at 1.2598 and low at 1.2524.

GBP/USD has dropped from the recently made fresh aforementioned highs for the month of April. Today's trading sees markets returning from a long weekend and reacting to the US inflationary data that came last week as a disappointment for dollar bulls. The March CPI numbers for the US surprised markets on the downside, declining by 0.3% m-o-m. However, there has been a late session pick-up in US yields to 2.2552 the high in recent trade, driving positive pressures in the DXY and capping sterling's advance as traders take profits. 

US: Downside surprise from March CPI numbers - Nomura

Super-low real yields for longer is an anchor for the dollar - Socgen

Other risks driving the dollar, besides the sounds of the war-drums,   were the recent comments made by President Trump complaining about the dollar's strength that caught the market off-guard last week. Despite the strength of US exports, Trump complained that the "strong dollar" was hampering the competitiveness of US firms. Sterling was able to capitalize on that and recover from the 1.25 handle, extending the correction through 1.2570/80 recent highs.

GBP/USD levels

Key near term resistance is the top of the channel at 1.2625/31, analysts at Commerzbank suggested, further arguing, "only above the 1.2707 February high would allow for further strength to the 1.2776 December high to be seen. Between it and 1.2836 lie several Fibonacci retracements and major resistance and we suspect that it will fail there." To the downside the analysts explained, "Below 1.2347 (Feb low) would cast attention back to the 1.2110 recent low. This is considered to be the last defense for the 1.1988 January low."