GBP/USD drops to four-day lows, finds support around 1.3830

• Pound about to end weeks facing bearish pressure.
• US dollar gains amid market sentiment deterioration and higher yields.

The GBP/USD extended the decline and bottomed at 1.3828, the lowest level since Tuesday. It then rebounded modestly, holding onto daily losses and about to post a weekly decline. The US dollar remains strong amid falling equity prices and higher US yields.

The DXY is rising 0.22% at 92.05, at the highest level in a week. The index jumped above 92.00 after the US 10-year yields climbed from below 1.70% to 1.74%. In Wall Street, the Dow Jones is falling 0.75% and the Nasdaq rises by 0.35%.

The deterioration in market sentiment helped the dollar and weighed on the pound. EUR/GBP erased losses and hit two-day highs above 0.8580. Stocks dropped after the Federal Reserve said it was not extending the temporary relief from capital-requirement for banks. In the UK, it was reported that government spending pushed the public finances deeper into deficit in February: it was the biggest for a February on record.

From a technical perspective, GBP/USD is moving with a negative bias in the very short-term. On a wider perspective, it continues to move sideways, unable to break above 1.4000 and with strong support between 1.3830 and 1.3800.

Technical levels