GBP/USD recovers losses, treasury yields surrender gains

• GBP/USD recovers from session lows.
• Treasury yields retreat from multi-year highs.

GBP/USD found takers at the daily low of 1.3857 and moved higher to 1.3896, possibly due to retreat in the 10-year treasury yield surrendering the daily gains.

As of writing, the spot is exchanging hands at 1.3890. The 10-year yield clocked a high of 2.67 percent; the highest level since July 2014 despite US government shutdown. However, the yield has backed off from the multi-year highs and was last seen trading largely unchanged on the day at 2.64 percent.

This seems to have put a bid under cable, despite Friday's disappointing UK retail sales release. So, is Pound set to test 1.40 soon?  Kathy Lien from BK Asset Management says, "UK data has taken a turn for the worse with consumer price growth slowing year over year and retail sales taking a nosedive in the month of December. This does not bode well for next week's fourth-quarter GDP report as spending slowed in the last 3 months of the year."

Lien adds that Pound could slip to 1.37 if the UK wage growth numbers due this week disappoint expectations.

GBP/USD Technical Outlook

Jim Langlands from FXCharts prefers to buy the dips as the long run charts remain bullish.