FX.co ★ Fixy | GBP/USD

On Friday, the GBP/USD pair received further buying support for the second consecutive day, recovering from its year-to-date low of around 1.3135 reached earlier in the week and currently trading near 1.3325. The pair hit a new monthly high at the start of European trading, driven by a weaker dollar and strong domestic economic growth. Despite recent high US inflation data for both consumer and wholesale sectors, market participants generally believe the Federal Reserve will maintain current borrowing costs at its meeting later this month. This expectation was reinforced by neutral comments from Federal Reserve Chair Kevin Warsh, and the dollar index fell to a one-and-a-half-week low as US Treasury yields declined sharply. Meanwhile, the pound continued to be supported by hawkish policy signals from Bank of England Governor Andrew Bailey and better-than-expected UK GDP growth data, providing strong support for the pound's upward trend. From a technical analysis perspective, the overnight break above the 1.3260-1.3265 confluence—which combines the 100-period exponential moving average on the four-hour chart with the 23.6% Fibonacci retracement level of the August-October decline—is a major technical catalyst for bullish traders. Momentum indicators reinforce this short-term positive outlook: the Relative Strength Index (RSI) on the four-hour chart is hovering around 64, while the Moving Average Convergence Divergence (MACD) continues to extend into positive territory above its signal line, suggesting that buyers remain firmly in control of price action in the absence of other significant economic data.

Technically, immediate upside resistance lies at the 38.2% Fibonacci retracement level at 1.3343, followed by the 50.0% Fibonacci retracement level near 1.3406, and then the 61.8% Fibonacci retracement level at 1.3468. At these levels, further price increases may face increased selling pressure. On the downside, initial dynamic support lies at the confluence of the 1.3265 area, formed by the 100-period exponential moving average (EMA), and the 23.6% Fibonacci retracement level. A sustained break below this level would weaken the current bullish structure and could lead to a test of the key structural support level near 1.3140.