FX.co ★ dagistanieagle | GBP/USD

GBPUSD Daily Outlook The GBP/USD pair is heavily influenced by macroeconomic trends and the policies of the central banks of the UK and the US. Inflation in the UK has slowed but remained stable, forcing the Bank of England (BoE) to tighten monetary policy. At the same time, the UK economy is showing signs of slowing, limiting the room the BoE can afford to tighten policy aggressively without triggering recessionary pressures. Across the Atlantic, the Federal Reserve (Fed) is facing weak labor markets and deflationary pressures, with markets expecting a rate cut in the second half of 2025. The divergence between the growth trajectories and monetary policy stances of the two economies continues to drive GBP/USD volatility. Geopolitical tensions and volatile US Treasury yields are also driving the exchange rate, and investors remain cautious but increasingly wary of what’s to come. Technically, the GBP/USD daily chart is showing a strong upside reversal, with a V-shaped correction from the previous low of 1.2100. This level represents a major bottom formed after a long-term downtrend above 1.4200 in late 2024. Since this bottom, GBP/USD has experienced a sharp trend reversal, breaking through several resistance levels with strong momentum and minor corrections. GBP/USD is currently trading at 1.3525, testing a major resistance level that coincides with the previous high and the upper boundary of the recent correction. The uptrend has completed approximately a 100% Fibonacci retracement of the previous downtrend, indicating that the price is reversing its downward trend. The price structure shows a clear uptrend channel consisting of a series of higher highs and lower lows since the November 2024 low. The price is currently supported by the 0.0% Fibonacci level (1.3650-1.3700). This level formed a major resistance level in the previous sideways range. This level is an important decision point to determine whether the uptrend will continue or decline after hitting the resistance level. The internal trend structure of the recent uptrend suggests that the uptrend is likely to continue. The downtrend has been gradual, finding support mainly near the 23.6% and 38.2% Fibonacci levels. These minor corrections indicate strong buying pressure and weak selling pressure, confirming bullish control. If the pair breaks the 1.3700 resistance, the next logical target would be around 1.3900, followed by the psychological level of 1.4000. These areas coincide with important historical areas that have formed strong support and resistance levels in the past. Conversely, an upward breakout of the current levels could lead to a correction towards the 1.3300-1.3200 area, which includes the 23.6% Fibonacci retracement level and support for the uptrend line from early 2025. A break above this level would likely lead to a larger correction towards 1.2980 and 1.2750 (38.2% and 50.0% Fibonacci levels respectively). The 1.2760 area also coincides with an important horizontal support level that has supported multiple times in the past, suggesting further upside potential. Momentum indicators are showing a strong uptrend, but also a short-term downside potential. The Relative Strength Index (RSI) is currently at 57.84, indicating a bullish trend but approaching overbought territory. These indicators suggest that the market could experience a temporary downside or minor correction if the uptrend continues. The Stochastic Oscillators at 66.00 and 76.87 are also indicating overbought conditions, suggesting a short-term downside before a sustained uptrend resumes. However, unless these indicators avoid a bearish crossover near overbought territory, the bullish scenario will remain. The MACD indicator supports the uptrend, while the histogram and signal line are above the zero line. The widening gap between the MACD and the signal line reinforces the uptrend. However, any convergence or crossover could be a warning sign of weakening momentum or a possible correction. The price is moving along ascending moving averages, with the 20-day and 50-day moving averages periodically supporting the uptrend. These dynamic support levels are helping to maintain the uptrend and could also act as bearish support. Furthermore, the Bollinger Bands are widening, suggesting increased volatility and a significant breakout that could trigger the uptrend if key resistance levels are breached. In summary, the GBP/USD pair maintains a strong uptrend, supported by higher highs and higher lows, strong momentum, and a slight pullback. The price is currently testing key resistance levels, which could lead to a renewed uptrend targeting 1.3900 and beyond. While short-term indicators suggest a possible sideways trend or correction, the medium-term outlook remains positive as long as the price remains above the ascending trendline and key support levels. Traders should expect a clear break above 1.3700 to signal a continuation of the trend, while a break below 1.3200 would signal a deeper correction.