The GBP/USD pair moved slightly higher during early European trading, marking its third straight session of gains. The pair traded near 1.3480, edging closer to an important technical barrier around 1.3500.
Despite the recent rebound, the broader trend still points slightly downward. Technical indicators show the pair trading below the 50-day Exponential Moving Average (EMA) at 1.3492, which often acts as resistance when markets are weak. At the same time, the price remains above the shorter nine-day moving average, currently near 1.3433.
This mixed positioning reflects a market that is trying to recover but still facing pressure from a stronger US dollar and global uncertainty.
Daily chart analysis shows the pair moving inside a descending channel, a pattern where prices gradually trend lower while forming lower highs and lower lows. Momentum indicators also suggest that upward moves may be temporary.
The Relative Strength Index over 14 days has recently bounced from near-oversold levels but remains below the key 50 mark, indicating that bullish momentum remains limited.
Key Support and Resistance Levels
Technical traders closely watch specific price levels to determine the next move in currency markets. In the case of GBP/USD, both support and resistance levels are clearly defined.
Immediate support lies at the nine-day EMA near 1.3433. If the pair falls below this level, selling pressure could increase.
Further downside targets are located at 1.3350, which represents an important price reversal area. A deeper decline could push the pair toward the lower boundary of the descending channel near 1.3050.
Additional key levels traders are monitoring include:
- 1.3433 – Nine-day EMA support
- 1.3350 – Key short-term support zone
- 1.3050 – Descending channel support
- 1.3010 – Approximately 11-month low
On the upside, the main resistance remains the 50-day EMA at 1.3492. A break above this level could strengthen bullish momentum.
If the pair manages to move above the descending channel resistance around 1.3590, it may open the door for a larger rally toward 1.3869, the highest level reached since September 2021 on January 27.
Dollar Strength and Data Ahead
The outlook for the US dollar remains firm, which is limiting gains in GBP/USD. The US Dollar Index, which measures the dollar against six major global currencies, has climbed 0.5% to around 99.35.
A stronger dollar typically pushes the GBP/USD pair lower because the exchange rate reflects how many dollars are needed to buy one British pound.
Geopolitical developments are also influencing currency markets. Rising tensions in the Middle East have added uncertainty after Mojtaba Khamenei was announced as the new Supreme Leader of Iran. Meanwhile, Donald Trump has criticized the leadership change, adding further geopolitical tension.
Investors are now focusing on upcoming economic reports that could drive the next move in currency markets.
Key data releases expected this week include:
- US Consumer Price Index (CPI) for February, due Wednesday
- UK Gross Domestic Product (GDP) monthly data for January
- UK factory and manufacturing output, scheduled Friday
These reports will provide new insight into inflation and economic growth in both the United States and the United Kingdom.
If inflation remains high in the US, the dollar could strengthen further, potentially pushing GBP/USD lower. However, stronger-than-expected UK economic data could help the pound regain momentum.