FX.co ★ PipsHunter99 | GBP/USD

GBP/USD struggles near 1.3600, with upside capped below 1.3660, keeping the short-term bias cautiously bearish. BoE’s dovish stance and weak UK growth outlook limit sterling gains despite temporary USD softness. Key support rests at 1.3500, with a break exposing 1.3460 and 1.3420 downside targets. The recent volatility in the pound reflects changes in market sentiment, influenced by expectations of UK and US monetary policy and macroeconomic performance. A weaker dollar temporarily boosted the pound as risk appetite improved, but overall weekly performance remains weak, reflecting continued investor caution. In the UK, the Bank of England’s decision to maintain its key interest rate was largely expected, but its accompanying comments reinforced a dovish policy stance. Policymakers signaled a willingness to cut rates if deflation continues as expected. Bank of England Governor Andrew Bailey reiterated that further monetary easing may be needed to support economic stability. Additional comments from senior officials highlighted that while inflation has moderated to the target levels, underlying growth remains fragile, particularly in the private sector, limiting the central bank’s scope to maintain a tight policy stance for an extended period. Meanwhile, political uncertainty and domestic fiscal concerns continue to weigh on investor confidence, leading to cautious inflows into UK assets. Across the Atlantic, US economic data added complexity to currency market dynamics, particularly weak employment figures, reinforcing market expectations for an easing of monetary policy by the Federal Reserve in 2026. Rising unemployment claims, rising layoffs, and fewer jobs combined to dampen the dollar’s upward momentum, although it occasionally rose to temporary risk aversion. Consumer confidence indicators improved slightly, but mixed inflation expectations suggest continued uncertainty about price stability, further complicating the Federal Reserve’s policy outlook. Market participants remain very focused on upcoming U.S. macroeconomic data, particularly the labor market, inflation, and retail sales figures, which are expected to influence the near-term trajectory of the dollar. Looking ahead, traders will closely monitor upcoming GDP data from the UK alongside central bank commentary for further clues regarding growth prospects and interest rate trajectories. The GBP/USD pair saw a modest recovery towards the end of the week, but the overall technical structure still suggests a fragile and very uncertain bullish momentum. The price hesitated after a brief climb to the 1.3600 area, indicating that sellers are still actively defending higher levels. In the short term, the 9-period simple moving average (SMA) is struggling to cross above the 20-period SMA, a possible early sign of a recovery, but confirmation requires a solid close above these two dynamic resistance levels. The pair’s failure to decisively break above 1.3600 highlights ongoing selling pressure and makes the medium-term outlook more consolidative than a full-blown reversal. For the bulls to regain control of the structure, prices need to decisively break and hold above 1.3660, a key resistance level that coincides with recent highs. A successful break above this area could open the way to 1.3700, followed by 1.3745 and 1.3800, which remain key medium-term bullish targets. If the bullish momentum continues after breaking through this area, the pair could challenge 1.3865 and eventually test the psychological level of 1.3900, where profit-taking is expected to intensify. On the downside, immediate support is at 1.3560, followed by the psychological level of 1.3500, which has become a significant demand area in recent trading. A break below 1.3500 could lead to deeper downside targets, such as 1.3460, 1.3420, and even 1.3365, which represents a broader technical turning point. Continued selling pressure could push the pair down to 1.3300, a long-term structural bottom, while further declines could shift focus to 1.3240 and 1.3180. Momentum indicators suggest that as long as the pair trades below the short-term downtrend resistance and fails to close above the 20-day moving average, downside risk remains high. The tightening volatility also suggests that a potentially larger sideways move is imminent, with traders closely watching whether prices can break through resistance levels or break below multiple support levels.