What drove GBP/USD higher on January 20?

The primary driver was a broad softening of the US Dollar as markets repriced trade-policy risks and repositioned following the US holiday, despite higher US Treasury yields.

What are the key resistance levels for GBP/USD?

The immediate intraday resistance is at 1.3495, with a major psychological barrier located at 1.3500.

How did US yields affect the Forex market today?

While yields rose (10Y ~4.27%), they failed to support the USD, instead acting as an amplifier for market volatility and demand for safe-haven hedges like CHF and JPY.

GBP/USD Firmed at 1.3474 on Policy Risk Repricing | FXPremiere

Sterling firms toward 1.3500 as the US Dollar softens amid trade-policy uncertainty and a post-holiday positioning reset despite rising US yields.

The British Pound climbed against the greenback on Tuesday, as a broad-based US Dollar softening took hold amid renewed trade-policy uncertainty. Despite a significant push higher in U.S. Treasury yields, the market's focus shifted toward policy-risk repricing and risk hedging, allowing European currencies to exploit a positioning reset following the U.S. holiday.

Market Context: Policy Risk Overpowers Yield Spreads

During the January 20 session, the traditional relationship between narrow interest rate differentials and currency strength was disrupted. While U.S. nominal yields remained firm—with the 2-year Treasury trading near 3.946% and the 10-year backing up toward 4.27%—the US Dollar failed to capture its usual bid. Instead, the move reinforced a narrative of volatility and hedging demand.

Risk sentiment leaned slightly defensive, favoring liquidity and classic safe-havens like the Swiss Franc (CHF) and Japanese Yen (JPY). This environment allowed the GBP/USD pair to push through intraday resistance as traders unwound Dollar-long positions in anticipation of further trade-policy headlines.

Session Breakdown: Chronological Flow

Asia Close to London Open: A cautious risk tone dominated, with safe-haven demand visible in the CHF. Sterling found initial support as liquidity improved during the London handover.
London Morning: UK labor market data provided a fresh signal for Bank of England (BoE) rate pricing, adding a local fundamental pillar to GBP crosses.
New York Open: As U.S. cash markets reopened, cross-asset hedging activity intensified. Equity weakness (S&P 500 futures down approximately 1.0%) reinforced defensive posturing.

GBP/USD Technical Structure and Key Levels

The GBP/USD pair closed at 1.3474 (+0.38%), maintaining a bullish bias throughout the New York morning. The intraday tape showed a clear "USD-leg" repricing, with the pair carving out a range between 1.3419 and 1.3495.

Technical Inflection Points:

Resistance: 1.3495 (Intraday High) / 1.3500 (Psychological Barrier)
Pivot Level: 1.3463
Support: 1.3419 (Intraday Low / Downside Inflection)

A sustained push through 1.3495 would confirm a continuation of the current bullish momentum. Conversely, a failure to hold above the 1.3463 pivot would suggest a mean reversion toward 1.3400.

Cross-Asset Transmission

Today's market action highlights that we are currently in a "risk + policy" regime rather than a "rate differential" regime. While U.S. rates are elevated, they are currently acting as an amplifier for volatility rather than a magnet for capital. This is evidenced by the firming of low-yielding safe havens against the Dollar.

Upcoming Catalysts to Watch

Investors should monitor the following data releases over the next 24 hours to gauge if the Sterling bid has legs:

US Housing Data (Wednesday): Building permits and housing starts (13:30 London).
US Activity Data: Pending home sales (15:00 London).
EIA Crude Inventory: Potential impact on commodity-linked risk sentiment.