FX.co ★ GBP/USD

The GBP/USD pair continues to present a technically intriguing setup, combining both corrective and directional signals that make the current situation highly nuanced. On the hourly chart, GBP/USD remains confined within a descending channel, with the price hovering close to the upper boundary, indicating that bears are still holding control despite the pair’s attempts to rise. The recent rebound from 1.3260 to 1.3369 showed that the bullish side is not entirely out of the picture, as buyers temporarily regained momentum to test the 200-period moving average, which lies around 1.3400. However, this zone now acts as a strong dynamic resistance level that coincides with the upper trendline of the declining channel. From a technical standpoint, GBP/USD needs to break and consolidate above this area to confirm a sustained bullish correction; otherwise, the market risks rolling back toward the 1.3260 support. The fact that volatility remained muted at the start of the week implies that traders are still digesting recent U.S. political headlines and macroeconomic cues. This lack of decisive movement, however, often precedes strong directional breakouts, and in the case of GBP/USD, the bias remains moderately bearish unless the price firmly establishes itself above 1.3400. From an Elliott Wave perspective, the pair could currently be completing the final phase of a corrective wave, with the potential for a deeper leg lower to unfold in the coming sessions.

That being said, GBP/USD also exhibits signs that a short-term upward correction could extend toward 1.3550, which corresponds to the 61.8% Fibonacci retracement level of the previous decline. This scenario would align with the AB=CD harmonic pattern visible on the hourly chart, where the AB and BC legs are already formed, and the CD leg remains in progress. Should this pattern complete near 1.3414–1.3550, GBP/USD could then face renewed selling pressure as the market resumes its larger downtrend. Fundamentally, the pound remains under pressure due to expectations of cautious Bank of England policy shifts and persistent U.S. dollar strength backed by solid Treasury yields. Still, the temporary bullish structure can’t be dismissed, especially if GBP/USD maintains momentum above 1.3340. A decisive break above 1.3414 would likely encourage technical buying, but traders should treat it as a corrective move within a broader bearish framework. Ultimately, while GBP/USD might attempt to climb in the short term, the medium-term outlook favors sellers, with potential targets below 1.3135 if the pair loses ground again.