GBP/USD is currently positioned around 1.3760, reflecting a decline of approximately 0.30% for the day after struggling to maintain levels above 1.3800. The pair retreated from Thursday’s peaks slightly above 1.3850 as the USD gained traction from developments in Washington. The advancement of a spending deal by the US Senate, which mitigates the risk of a shutdown, provided short-term support for the Greenback and prompted profit-taking in sterling, approaching four-year highs around 1.3870. The recent shift does not negate the overall positive trend observed this week: the currency continues to trade significantly above the 1.3700 level that previously served as a resistance point earlier this month, now functioning as a preliminary support zone. On the broader chart, GBP/USD is contained within an ascending channel that began forming in 2023. This week’s increase to just above 1.3850 brought the price close to the four-year resistance level at 1.3870. The lower boundary of the structure is positioned around the mid-1.36s, whereas the midline has been fluctuating in the range of 1.37–1.38. The recent rebound from 1.3750 and stabilization around 1.3720–1.3700 indicate that this range has transitioned from a resistance level to a support level. Provided that cable maintains a daily closing above 1.3700, the most favorable trajectory continues to trend toward 1.39 and beyond. A decisive move below 1.3700 would serve as the initial significant alert that the channel is weakening, suggesting a potential retest of the low-1.36s could be forthcoming.
The daily GBP/USD chart currently indicates that the 50-day moving average has crossed above the 200-day moving average, signaling the classic “Golden Cross” that numerous analysts utilize as a medium-term trend filter. Notably, the spot price is not only above both averages but is trading significantly higher, close to 1.3760, following a peak of 1.3850 earlier this week. The configuration indicates that the uptrend is already in place rather than merely beginning. Dips into the 1.36–1.37 region align with the moving average cluster and the channel’s mid-zone, indicating that pullbacks toward those levels remain technically sound within a bullish framework. They do not suggest a top unless there is a decisive break below 1.36. The GBP component of GBP/USD is bolstered by anticipations that the Bank of England will maintain a prudent stance on rate cuts in comparison to the Federal Reserve. Given the persistent levels of services inflation and wage dynamics in the UK, market participants remain hesitant to factor in a significant easing trajectory. The current position introduces a risk premium into sterling, clarifying why the pair remains around the 1.3800–1.3870 range despite the USD receiving intermittent support from US fiscal developments. As traders approach the upcoming BoE meeting, they are increasingly willing to invest in GBP, anticipating that the Bank will maintain tighter financial conditions for an extended period. This outlook supports levels around 1.3830 and keeps the 1.3870 high within reach.
On the US side, the dynamics of the USD are evolving from a purely downward trend to a more balanced trading environment. The Federal Reserve maintained its policy rate at 3.75%, aligning with forecasts; however, the more significant narrative revolves around political dynamics and economic data. A Senate compromise advancing funding legislation alleviates immediate shutdown concerns and strengthens the Greenback following a phase where global funds reduced their exposure to the US. Simultaneously, rising producer prices and the nomination of Kevin Warsh as the next candidate for Fed chair shift expectations slightly towards a more hawkish stance. The combination of factors accounts for the potential retreat of GBP/USD from the 1.3830–1.3850 range back toward 1.3760, despite the absence of any new negative developments from the UK. Nonetheless, previous instances where the dollar struggled to maintain its gains following comparable supports indicate that the strength of the US remains tactical rather than indicative of a fully reestablished bull trend. Intraday, GBP/USD has established a clear progression of levels. Immediate resistance is positioned at 1.3830, the level that restricted price movement during the early London session, succeeded by the recent peak just above 1.3850. The critical level to monitor is the four-year cap near 1.3870, which requires a daily close above it to pave the way toward the channel ceiling around 1.3960. On the downside, the initial significant support is at the 1.3750 pivot, where buyers have already entered the market. The 1.3720–1.3700 range is critical to maintain the bullish structure. A sustained break below 1.3700 would indicate a move toward the low-1.36s and suggest that the market is shifting away from viewing every dip as a buying opportunity. Until that occurs, the technical strategy continues to suggest buying the dip instead of fading the rally.
Medium-term projections based on the bullish channel in GBP/USD target the 1.39–1.41 range. The upper boundary of the channel is presently anticipated to be near 1.3960, serving as the initial structural target following a decisive close below 1.3870. A rise above 1.3960 logically directs price toward the significant 1.4000 level, where options strikes and previous congestion converge. A lighter resistance shelf is evident around 1.4060, and beyond this level, the chart shows a clear path toward approximately 1.4475. The distant target, which hasn’t been approached since prior to the Brexit shock, necessitates a prolonged phase of USD weakness and ongoing caution from the BoE regarding rate cuts. The trajectory is clear: from 1.3760, a move to 1.40 indicates an approximate 2% increase, while reaching 1.4475 would signify around 5%–6% growth in the upcoming quarters. The approach to GBP/USD has transitioned from a strong focus on shorting sterling to a more measured strategy, with traders now concentrating on timing their entries instead of challenging the prevailing uptrend. The movement toward 1.3850 eliminated remaining short positions that were relying on the 1.37–1.38 resistance zone. Currently, sentiment reflects a more complex landscape: macro funds identify opportunities in acquiring GBP during dips due to the divergence in UK and US policies, whereas quick traders are inclined to capitalize on any spikes exceeding 1.3850, particularly if US data exceeds expectations. This interplay illustrates how the pair can surge towards 1.3870 and subsequently retreat below 1.3800 in the span of a single news cycle. The consistent support at 1.3750 and 1.3700 indicates that substantial investors are continuing to engage during downturns rather than withdrawing from the narrative.
By analyzing the price structure, macroeconomic environment, and market sentiment, it is evident that GBP/USD is currently positioned in a fundamentally bullish phase. The Golden Cross observed on the daily chart, along with the sustained rising channel and the progression of higher highs targeting the 1.3850–1.3870 range, indicates a robust outlook for sterling relative to the USD. Short-term US Dollar support stemming from the Senate funding breakthrough, with the Fed at 3.75% and Warsh-related headlines, could pull the pair back toward 1.3750–1.3700. However, these movements appear corrective rather than indicative of the onset of a bear market in GBP. With the current level around 1.3760, there are supports identified at 1.3750 and 1.3700, while upside targets are set at 1.3960 and above 1.40. The analysis based on the present data indicates a clear directional stance: GBP/USD = Buy, maintaining a bullish outlook as long as the price remains above the support range of 1.36–1.37.