GBP/USD is maintaining the majority of its January recovery following a significant 4% increase from the monthly low. The price reached a multi-year high of 1.3869 on 27 January, marking the strongest level since September 2021, before experiencing a pause. Recent sessions indicate that GBP/USD commenced near 1.3665, reaching intraday peaks of approximately 1.3707, and is currently consolidating within the range of 1.3690 to 1.3730. The pair is currently establishing a new weekly and monthly range above the mid-1.36s, with buyers maintaining control, although they are encountering significant supply in the 1.3860–1.3900 zone. In the short-term analysis, GBP/USD is experiencing an upward movement within a rising pitchfork established from the January low. The recent pullback from the 1.3869 spike found reversal near the median line, thereby validating that level as a significant support point. The initial decline from the January peak extended approximately 1.6% and encountered support at the September low-day close around 1.3345, leading to the current 4% rally. Despite that strength, a more pronounced corrective wave from previous cycles remains evident on higher timeframes. The pair is currently exhibiting an upward trend on the short-term chart, yet it continues to operate within a larger corrective framework established by previous years’ fluctuations.
The daily structure indicates a clear bullish trend in the near term. The GBP/USD is currently positioned above the nine-day EMA at 1.3678 and the 50-day EMA at 1.3493, with both moving averages trending upward, indicating a strong trend confirmation. The price is positioned above the 200-day moving average, following the establishment of a previous weekly range just above that long-term indicator. A number of desks indicate a rising wedge pattern, with the lower boundary positioned around the nine-day EMA at approximately 1.3678 and the upper wedge line close to 1.4010. The pitchfork originating from the January low indicates that the 75% parallel is limiting the recent movement just under 1.39. The combination of wedge resistance, channel ceilings, and stacked EMAs positioned beneath the price illustrates the current market’s tendency to pause instead of pursuing aggressive extensions. The 14-day RSI at approximately 61.75 remains above the 50 mid-line and below the 70 threshold, indicating sustained bullish momentum without any signs of a blow-off. The intraday RSI hovering around the mid-50s indicates a steady progression rather than an overextended surge. A technical perspective highlights that the constricting range within the wedge indicates a reduction in buying power, despite the continuation of higher lows. Another observation indicates that previous oversold conditions have been fully addressed, suggesting that current levels are more conducive to a continuation rather than a downturn. The analysis indicates a clear conclusion: there is an ongoing upside bias; however, the potential for volatile trading rises as GBP/USD approaches resistance levels exceeding 1.38.
The complete short-term narrative hinges on the extent to which the support levels beneath 1.37 are examined. The initial support level is positioned at the nine-day EMA around 1.3678, which concurrently aligns with the lower boundary of the wedge. Intraday analysis indicates a wider near-term demand range between 1.3650 and 1.3680; maintaining this zone suggests that the recent decline is merely a temporary interruption. Substantial levels begin to cluster beneath that area. The 1.3593 level, established by the highs in May and August, represents the next significant support area. Significant support is located at 1.3542–1.3544, coinciding with the 38.2% retracement of the November increase and the 61.8% retracement of the January range. Below that zone, the 50-day EMA at 1.3493 serves as an essential mid-trend indicator. The broader bullish invalidation for the January upward movement is currently established at the yearly open near 1.3474. A decisive move below 1.3474 would reveal the support reversal zone around 1.3350, indicating that the 4% recovery is being reversed. On the topside, GBP/USD encounters a significant barrier of levels that accounts for the current stagnation in price movement. The initial significant resistance level is identified between 1.3745 and 1.3749, which integrates the high-day close from 2025 alongside the peak from 2022. The range corresponds with short-term EMA resistance in the vicinity of 1.3720–1.3740 on lower timeframes. A decisive daily close above 1.3750 would indicate that buyers have regained control and pave the way for a move back towards the January high zone at 1.3860–1.3869. The 100% Fibonacci extension of the November advance, ranging from 1.3870 to 1.3900, establishes a significant profit-taking zone and marks the peak of the latest impulse leg. Should the price surpass 1.3900, attention will then turn to the 1.4003–1.4010 range, which coincides with the 61.8% extension of the larger 2022 rally and the upper boundary of the rising wedge pattern. A breakout above the 1.40 level would indicate a significant structural change and bring the April 2018 high of 1.4248 into consideration. However, the market remains confined within the 1.36–1.39 range for the time being.
The USD component of the cross continues to offer a slight advantage for GBP/USD. The DXY is currently positioned between 97.30 and 97.40 following a recovery from approximately 95.55, although it continues to be constrained by a descending trendline originating from the January peaks. The index is positioned slightly above the 50% Fibonacci retracement at 97.22, while the 38.2% level around 96.83 serves as a more substantial support area. The 200-EMA and the trendline converge in the range of 97.60–97.70, forming a significant resistance level that has consistently thwarted efforts to further the recovery. Short-bodied candles in that region indicate uncertainty rather than robust demand for the dollar. The RSI at approximately 55 indicates a slight positive momentum, yet lacks a definitive breakout characteristic. Rate markets continue to reflect an expectation of approximately 1% Fed easing in 2026, alongside two additional cuts, despite the nomination of Kevin Warsh as the next Fed chair and certain officials downplaying inflation risks. The prevailing environment maintains a bearish sentiment for the USD, thereby reinforcing support for GBP/USD declines, provided that UK-specific risks remain subdued.
Macro catalysts are focused on the Bank of England and significant US economic data releases. The Bank of England’s current rate stands at 3.75%, and it is anticipated that this week’s meeting will result in no alterations to the policy. The present pricing reflects merely a 4% likelihood of an immediate reduction, with the initial cut now anticipated no earlier than April, and projections suggest as many as four reductions throughout 2026 amid a sluggish growth environment. The December cut was a tight 5–4 decision, and Governor Andrew Bailey has already indicated that additional cuts will be a “closer call” as rates approach neutral. The combination of factors bolsters the pound, while simultaneously limiting the extent to which aggressive guidance can evolve. The ADP employment release and ISM Services data on the US side are critical factors influencing volatility in GBP/USD. Robust US data that drives DXY above 97.80 towards 98.25 could exert pressure on the pair, increasing the likelihood of a retest of support levels near 1.3650 and 1.3593. Weaker US data that support rate-cut expectations could lead to a breakout above the 1.3745–1.3749 range and maintain pressure on the 1.3860–1.3900 zone.