GBP/USD retreats below 1.3400, still holds to daily gains

• Spot moved off daily highs after being unable to hold on top of 1.3400. 
• Greenback gained momentum amid rising US yields. 

The GBP/USD pair is consolidating gains on Monday but it failed to hold above 1.3400. During the American session, it peaked at 1.3417 and then pulled back. As of writing it was trading at 1.3385/90. 

The greenback strengthened in the market during the last hours amid rising US bond yields. The 10-year yield rose from 2.37% to 2.394%, the highest level since last Wednesday. The Dollar Index climbed above 93.00 and erased most of its losses. 

Earlier today, the Pound got a boost from economic data. The UK CBI Industrial Order Expectations for December showed that manufacturing orders held at 30-year highs. On a wider perspective, Brexit and political uncertainty continue to weight on the pound. Regarding the greenback, attention is on the US Congress that is expected to deliver a final version of the tax reform bill this week. 

Technical outlook 

“The pair continues developing inside a descendant channel, with the roof of the figure currently around 1.3435. In the 4 hours chart, the price settled a few pips above its 20 SMA, while technical indicators have recovered some ground, but the Momentum indicator remains within negative territory, with moderate upward strength, while the RSI indicator lost its strength upwards once surpassing its mid-line”, explained Valeria Bednarik, Chief Analyst at FXStreet.

To the downside, the key support is around the 1.3300 area that capped the downside last week and also today. A break lower could add pressure to the pound. Below the next strong support is seen at 1.3225.