GBP/USD hits 2-week low, eyes 2-month uptrend line

• Pound offered as gilt yields drop.
• GBP/USD nears 2-month ascending trendline.

The UK gilt yields are trading weak compared to their US counterparts, consequently, the GBP/USD pair is fast losing altitude.

The pair failed to hold above 1.35 handle and now looks set to test demand around 1.3460 - support of the ascending trendline drawn from Nov. 13 low and Dec. 26 low. The crucial trendline support could be breached as the 10Y US-UK yield spread may rise further in the GBP-negative manner in response to Brexit fears.

Also, an upbeat US data (PPI and weekly jobless claim) could play a role in pushing the spread higher in favor of the USD.

GBP/USD Technical Levels

A close below 1.3460 (ascending trendline) could mean the rally from the low of 1.3027 (Oct. 6 low) has topped out at 1.3613 (Jan. 3 high). The spot could then test 1.3353 (50-day MA). A violation there would expose 1.3282 (100-day MA).

On the higher side, a close above the 10-day MA of 1.3531 would open doors for re-test of 1.3613 (Jan. 3 high) and 1.3657 (Sep. 20 high).