GBP/USD Price Analysis: Downside resumes as yields soar amid fears of bigger rates from Fed

• GBP/USD has resumed its downside journey as the risk of Fed’s bigger rates has propelled US yields.
• Fed’s Powell sees a higher terminal rate than previously anticipated to bring down inflation.
• S&P500 futures have also resumed their downside journey, portraying that the risk-off mood is strengthening further.

The GBP/USD pair has delivered a downside break of the consolidation formed around 1.1820 in the Asian session. The Cable has resumed its downside journey and has refreshed its day’s low at 1.1812. Rising fears of a recession in the United States have propelled returns on US government bonds. The 10-year US Treasury yields have recaptured the 4.0% resistance.

The US Dollar Index (DXY) has refreshed its three-month high above 105.80 as the Federal Reserve (Fed) chair Jerome Powell has confirmed that bigger rates are in pipeline to tame the stubborn inflation. Fed’s Powell is expecting a higher terminal rate than previously anticipated. Meanwhile, S&P500 futures have also resumed their downside journey, portraying that the risk-off mood is strengthening further.

A breakdown from the range of 1.1914-1.2150 by the Cable is followed by a large consolidation breakdown formed in the past three months. The asset is expected to continue its downside move towards the horizontal support plotted from November 08 high around 1.1600.

The 20-period Exponential Moving Average (EMA) at 1.1960 is expected to act as a major barricade for the Pound Sterling.

Also, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which indicates that the downside momentum has been triggered.

Should the Cable break below the round-level support of 1.1800, US Dollar bulls will drag the asset further toward November 17 low at 1.17633 followed by November 14 low around 1.1700.

On the flip side, a move above February 24 high at 1.2040 will drive the asset toward February 23 high around 1.2080. A breach of the latter will expose the asset to February 21 high around 1.2140.

GBP/USD four-hour chart