GBPUSD Pushes Ahead with Caution in the Air

GBPUSD continues to trade within a technically supportive environment, underpinned by favorable momentum indicators and medium-term bullish patterns. However, signs of potential fatigue—such as the negative divergence in the Momentum Oscillator—suggest that caution is warranted in the near term. With monetary policy in both the UK and the U.S. remaining firmly in restrictive territory, upcoming price action around key support and resistance levels will be critical in determining whether the pair extends its rally or enters a period of consolidation. Traders should remain attentive to evolving macroeconomic signals and technical cues as the next directional bias takes shape.

High Impact Economic Events

Friday 09:00 am (GMT+3) – UK: Retail Sales m/m (GBP)

Chart Analysis

Since establishing a cycle low at 1.20987 on January 13, GBPUSD has appreciated over 12% from trough to peak, marking its highest level since the start of the year at 1.36315. The initial reversal was triggered by a classic failure swing pattern, which disrupted the preceding downtrend and signaled the onset of a bullish transition.

Confirmation of this directional shift came with the formation of a “Golden Cross,” as the 20-period Exponential Moving Average crossed above the 50-period EMA—an event typically viewed by trend-following models as a constructive medium-term signal.

Technical indicators continue to support the bullish bias. Momentum remains elevated above the 100 threshold, while the Relative Strength Index (RSI) is holding firm above the 50 neutral line—both suggesting sustained upside interest.

However, a developing negative divergence between the price and the Momentum Oscillator warrants close monitoring. This divergence may reflect weakening internal strength behind the advance, increasing the likelihood of a consolidation phase or corrective pullback in the near term.

Key Resistance Levels

If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:

1.35528: The first level of resistance is identified at 1.35528, which aligns with the weekly Pivot Point, PP, calculated using the standard methodology.

1.36315: The second price target is established at 1.36315, representing the daily high marked on June 13.

1.37289: The third price target is established at 1.37289, representing the weekly resistance, R2, estimated using the standard Pivot Points methodology.

1.38263: An additional price objective is estimated at 1.38263, mirroring the weekly resistance, R3, estimated using the standard Pivot Points methodology.

Key Support Levels

If sellers take control of the market, traders may focus on the following four key support levels:

1.33819: The initial support level is seen at 1.33819, representing the low point from June 19.

1.31390: The second support level is positioned at 1.31390, aligning with the swing low marked on June 12.

1.30135: The third downside target is noted at 1.30135, corresponding to the daily high reached on March 20.

1.26804: An additional downside target is observed at 1.26804, reflecting the 61.8% Fibonacci Retracement drawn from 1.20987 to 1.36315.

Fundamentals

The Bank of England’s Monetary Policy Committee (MPC) voted to keep interest rates at 4.25% in June, with six members in favor and three preferring a small cut to 4%. Inflation has fallen significantly over the past two years, and while it’s expected to stay around 3.4% for the rest of 2025, it’s still above the 2% target.

Economic growth in the UK remains weak, and the job market is showing signs of loosening. Wage growth is slowing, which could help bring inflation down over time. However, risks remain—especially from rising global energy prices and geopolitical tensions.

The Bank plans to keep interest rates high for now to ensure inflation continues to fall. Future rate changes will depend on how the economy and inflation evolve.

On June 19, 2025, the Federal Reserve decided to keep its key interest rate unchanged at 4.25% to 4.5%. The U.S. economy continues to grow at a solid pace, and the job market remains strong with low unemployment. Inflation is still somewhat elevated but improving gradually.

Although uncertainty about the economic outlook has eased, the Fed remains cautious and is closely monitoring incoming data. It plans to continue reducing its holdings of government and mortgage-backed securities and will adjust policy if needed to support its goals of low inflation and maximum employment.

Conclusion

GBPUSD has drawn attention in recent sessions, extending its bullish trajectory from the January low as technical and fundamental dynamics continue to support the pair. With monetary policy settings remaining restrictive in both the UK and the U.S., traders are closely watching price action for signs of potential exhaustion or continuation. As key support and resistance levels come into play, momentum indicators and central bank signals will likely shape the next directional move.