GBP/USD - Recovery falls apart as T-yields rise, eyes UK data

• USD finds bids as US 10-yr yield clocks 10-month high.
• Focus on the UK manufacturing production and trade balance data.

The recovery in the GBP/USD pair from yesterday's low of 1.3505 has run out of steam, courtesy of the rising treasury yield.

Having clocked a high of 1.3542 earlier today, the spot is now trading on the back foot at 1.3517.

The bid tone around the USD seems to have strengthened, tracking the rise in the 10-year treasury yield to 2.564 percent; its highest level since March 2017.

Treasury yields could continue to outpace gilt yields, pushing the Pound lower if the UK manufacturing production and trade balance data disappoints market expectations.

GBP/USD Technical Levels

A break below 1.35 (psychological level) would add credence to last Wednesday's bearish outside day candle and shall open up downside towards 1.3450 (support of trendline sloping upwards from Nov. 13 low and Dec. 26 low) and 1.34 (zero levels).

On the higher side, a move above 1.3542 (daily high) could yield a rally to 1.3586 (Jan. 8 high) and 1.3613 (Jan. 3 high).