GBP/USD Rises to 1.3400 as Dollar Weakens, Bulls Eye 1.3475 Breakout

The British pound (GBP) edged higher against the U.S. dollar (USD) on Thursday, extending modest gains as traders reacted to a broadly weaker greenback. The GBP/USD pair rebounded from a near two-week low of 1.3370, climbing above the 1.3400 mark during the Asian session. The move snapped a two-day losing streak, though analysts caution that the pair remains under short-term technical pressure.

The dollar’s retreat followed softer U.S. Treasury yields and subdued economic data, which weakened sentiment around the currency. Traders also adjusted positions ahead of key U.S. inflation figures expected later this week—data that could shape expectations for future Federal Reserve rate moves.

While the pound gained ground, market observers noted that the broader outlook remains mixed amid UK growth uncertainty and persistent inflationary pressures. Investors are also watching comments from the Bank of England (BoE) for clues on the timing of any potential policy shift.

Technical Setup Points to Key Resistance

From a technical standpoint, GBP/USD continues to trade within a descending channel formed earlier this month. Despite Thursday’s rebound, the pair faces stiff resistance near the 1.3465–1.3475 zone, which includes the upper boundary of the channel and the 100-period Simple Moving Average (SMA).

• Immediate resistance: 1.3465–1.3475 (key confluence zone)
• Next upside target: 1.3500 psychological level
• Further resistance: 1.3525–1.3530 and 1.3575–1.3580 zones
• Initial support: 1.3370 (channel base)
• Deeper downside target: 1.3330–1.3325, followed by 1.3300

Technical indicators on both the 4-hour and daily charts remain bearish, with momentum oscillators still in negative territory. Analysts warn that unless GBP/USD sustains a breakout above 1.3475, fresh selling could reemerge at higher levels, potentially capping further upside momentum.

Outlook: Bulls Need Confirmation

Market strategists emphasize that a decisive close above 1.3475 would be required for the pound to regain near-term control. Such a move could open the path toward 1.3530 and 1.3580, signaling a possible short-term reversal of the recent downtrend.

Conversely, failure to hold above 1.3400 may encourage renewed bearish interest, exposing the pair to another test of 1.3330 or lower. For now, GBP/USD’s path depends largely on the USD’s direction and the market’s interpretation of upcoming U.S. economic data.

With volatility expected to rise in the days ahead, traders are likely to stay cautious, balancing the potential for BoE policy shifts against the Fed’s evolving rate stance.