GBP/USD is currently positioned between 1.3615 and 1.3622, having struggled to maintain momentum after the attempt to reach 1.3850 to 1.3858. The pair has experienced a slight decline over the past three to four sessions, resulting in a modest weekly gain of approximately 0.12%. However, this pullback is occurring within a rising channel, rather than indicating a broken trend. The lower boundary of that channel is positioned around 1.3580, slightly beneath the current level, which explains why declines into the 1.3590–1.3600 range are being supported rather than continuing to drop further. The price is currently stabilizing above key structural supports instead of reversing the upward trend that began in the low-1.30s. On the daily chart, GBP/USD continues to exhibit an upward structure. The price is currently positioned above the 50-day EMA at approximately 1.3524, while the 50-, 100-, and 200-day moving averages are all trending upward. The 200-day SMA at approximately 1.3437 continues to establish the primary support level. The February low at 1.3510 and the ascending trend line from approximately 1.3035 (with support currently around 1.3490) represent the initial line of defense prior to the long-term average. The 20-day SMA near 1.3630–1.3631 has transitioned into immediate dynamic resistance; recent daily closes have been slightly below this level, indicating a loss of upside momentum without suggesting a reversal. Provided that closes remain above 1.3510 and significantly above 1.3437, the medium-term outlook for GBP/USD continues to be positive, with the current weakness viewed as a corrective phase within a prevailing uptrend.
On the 4-hour chart, GBP/USD is consolidating between a rising support line and a descending line drawn from the 1.3870 swing high. The focus of that squeeze is on the 0.618 Fibonacci retracement level near 1.3580, which coincides with the lower boundary of the ascending channel observed on the higher time frame. Immediate resistance is concentrated in the range of 1.3632–1.3635, where the nine-day EMA and the 4-hour 50-period moving average limit upward movements. A significant resistance level is positioned at 1.3690, which corresponds to a 0.382 retracement and previously served as an intraday cap. Following that, we have 1.3760 and the highs ranging from 1.3858 to 1.3869. On the downside, support levels are positioned at 1.3590, followed by 1.3550, 1.3510, and the 1.3437 200-day SMA. A decisive move and a close beneath the 1.3580–1.3590 range would indicate a potential for a more significant correction towards 1.3550 and 1.3510. Conversely, a rebound above 1.3690 would re-establish the trajectory towards 1.3760 and subsequently the 1.3850–1.3869 area. The 14-day RSI is currently at approximately 51, having decreased from overbought levels as GBP/USD surged past 1.37 and briefly exceeded 1.38. The shift towards the 50 line indicates a reduction in momentum and suggests a phase of consolidation, rather than a complete reversal. A renewed push above 60 on the daily RSI would indicate that buyers are regaining control, potentially bringing a retest of the upper channel area near 1.4150 and the 1.4248 high from April 2018 into focus. On intraday charts, the presence of smaller candle bodies alongside neutral momentum readings indicates that selling pressure remains subdued. Dips into support are being absorbed; however, there is currently a lack of conviction to pursue upside through the immediate resistance band.
The US Dollar Index is currently positioned between 96.96 and 97.10, maintaining its strength following a robust January jobs report and persistent risk-off sentiment in the market. In January, nonfarm payrolls increased by approximately 130,000 positions, nearly double the consensus estimate. Meanwhile, weekly initial jobless claims were reported at 227,000, just slightly above expectations and remaining low by historical standards. Continuing claims at 1.86 million suggest that re-employment is progressing at a slower pace, yet remains stable. The current scenario has elevated the likelihood of the Fed maintaining rates in March to approximately 94%, while also realigning expectations to around 63 basis points of easing by the end of the year, rather than anticipating a steep cutting cycle. Simultaneously, January CPI decreased to 2.4% year-on-year from 2.7%, with core inflation at 2.5% compared to 2.6% previously, indicating that disinflation is returning to form and reinforcing expectations for a June rate cut. Currently, DXY is experiencing a rebound from a complex support zone between 96.02 and 96.34, with higher lows being established as it approaches the 0.5 Fibonacci level and the 50-period moving average at approximately 97.21, alongside the 0.618 area around 97.60. A shift into the 98.00–98.50 range would present a new challenge for GBP/USD; a retreat toward 96.50 would alleviate that strain. Sterling is experiencing pressure from competing domestic influences. On a favorable note, the medium-term uptrend continues to hold, and GBP has emerged as one of the stronger major currencies this week, recording weekly gains against the US Dollar, albeit modest ones. On the downside, the blend of weaker UK GDP figures and the recent statements from the Bank of England has increased the likelihood of policy easing in 2026. The probability of a 25-basis-point rate cut at the BoE’s 19 March meeting is currently estimated at approximately 64%.
BoE’s Huw Pill has upheld a notably hawkish stance, emphasizing that core inflation remains crucial and that policy should remain restrictive for the time being, which is aiding in limiting the downside for the pound. Recent political chatter regarding Prime Minister Keir Starmer and the US ambassador nominees associated with Jeffrey Epstein has momentarily cast doubt on his leadership. However, support from the cabinet has mitigated the impact, preventing a chaotic increase in the risk premium for GBP. The upcoming UK calendar is packed with significant data: labour-market figures, inflation, and Retail Sales will all influence Bank of England expectations and may either support or contest the 1.35–1.38 range currently reflected in GBP/USD. From a structural perspective, GBP/USD continues to exhibit an uptrend as long as it stays above 1.3510 and, crucially, above the 200-day SMA at 1.3437. The price movement in the range of 1.3580–1.3600 is pivotal: this zone encompasses the lower channel boundary, the 0.618 retracement, and clear horizontal support. Maintaining a position above 1.3580 supports the continuation of the upward movement from the low-1.30s and suggests that the present decline is merely a temporary setback before another push towards 1.3690, followed by 1.3760 and the range of 1.3850–1.3869. A decisive close below 1.3580, particularly if it coincides with an RSI break under 45 and a decline through 1.3550, would validate a more significant correction toward 1.3510 and potentially the 1.3437 area. Considering the present setup – increasing long-term averages, a maintained upward channel, stable yet non-explosive DXY strength, and BoE cuts anticipated after those of the Fed – the outlook for GBP/USD leans moderately bullish, with evident downside risk should 1.3580 be breached. Based on that analysis, the recommendation is to Buy on dips within the range of 1.3550–1.3600, aiming for a medium-term target of 1.3760 and 1.3850. A structural risk line is identified below 1.3510, where the outlook may shift towards a deeper correction instead of a continuation.