GBP/USD drops to 9-day low as Trump's tax plan gathers momentum

GBP/USD fell to a 9-day low of 1.3102 after the US Senate's approval of the Republican-backed budget provided much needed momentum to Trump's tax overhaul plan.

The tax reform news has pushed the long duration treasury yields higher. At the time of writing, the 10-year yield is up 2.4 basis points and the 30-yr yield is up 3.2 basis points. The 2-yr yield remains flat lined.

Consequently, the US dollar is well bid across the board. The sell-off in cable could gather pace in Europe/US session if the EU leaders express concerns regarding the lack of progress in Brexit negotiations.

Currently, the GBP/USD pair is trading at 1.3120; down 0.27% on the day. The spread or difference between the US 10-year treasury yield and the 10-year UK gilt yield currently stands at 106 basis points; the highest level since September 7.

GBP/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, " Renewed selling pressure below 1.3120, October 12th low should result in a 100% retracement to 1.3026. Resistances are now at 1.3180, the immediate Fibonacci resistance, followed by the 1.3220/30 area where moving averages and the next Fibonacci level stand."