The GBP/USD pair has been advancing amid bond-related dollar weakness  and BoE hawkishness but the initial surge above 1.37 may prove  short-lived despite good reasons to rise. GBP/USD continues trading in  an upwards channel and is nearing the 2021 peak of 1.3705 – also the  highest since 2018. While momentum on the 4-hour chart is positive, the  Relative Strength Index is hitting the 70 level – entering overbought  conditions. That may result in a downside correction. The UK-EU free  trade agreement (FTA) is welcome, in that it avoided a hard Brexit for  merchandise trade. However, trade friction has risen and the government  has yet to clarify its post-EU industrial strategy, which needs to be  focused on productivity. Beyond a relief rally, the FTA does not provide  a compelling reason to buy GBP now according to ANZ Bank. EUR/USD saw a  quick drop below 1.2200 on French economy is seen contracting 4% in the  fourth quarter of 2020 despite the lifting of the coronavirus lockdown  and German’s health minister indicated impossibility to lift all  restrictions in February due to the virus contagion. The dollar nursed  losses on Wednesday as a retreat in U.S. yields sapped momentum from its  recent rebound and investors cautiously resumed bets that it can resume  sliding. Benchmark 10-year Treasury yields fell more than 6 basis  points from a 10-month high hit on Tuesday and the turnaround snuffed  out a three-day streak for the dollar. The dollar index was steady at  90.004 after falling 0.5% on Tuesday and is not far above last week’s  nearly three-year low of 89.206.