**GBP/USD Reverses Ahead of March Low to Stage Three-Day Rally**
*Credit: Articles and insights by Fiona Cincotta, as published on FOREX.com*
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The British pound has demonstrated buyers’ resilience over recent sessions, with GBP/USD reversing its decline just before retesting March’s key support area. The reversal has ushered in a three-day rally, drawing traders’ attention back to the major currency pair and prompting a reassessment of the factors influencing GBP/USD’s short- and intermediate-term outlook.
This article explores the drivers of the GBP/USD’s latest rally, evaluates the pair’s current technical landscape, discusses fundamental influences from both the UK and US economies, and outlines potential scenarios in the days ahead.
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**Key Highlights of GBP/USD’s Recent Performance**
– GBP/USD found support just above its March low, avoiding a fresh breakdown that could have unleashed further bearish momentum.
– The pound has now staged a three-day rally, climbing from the 1.2490s area toward the 1.2650 region at the time of writing.
– The reversal coincided with softer US economic data and dovish signals from Federal Reserve officials, which weighed on the US dollar.
– Technical signals are becoming more constructive, with momentum gauges and price structure signaling potential for further gains.
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**Technical Analysis: Where Does GBP/USD Stand Now?**
*Support Holds Above March Lows*
– GBP/USD retested important support just north of the March low at 1.2535 earlier this week.
– Despite downside momentum last week, bears failed to force a break below this threshold, indicating order flow from buyers at these levels.
– The area around 1.2530-1.2550 has been tested multiple times since mid-March, adding to its significance as a support zone.
*Three-Day Rebound and Key Resistance*
– The pair has now advanced for three consecutive sessions, reclaiming the 1.2600 mark and testing resistance near 1.2650.
– The 200-day simple moving average (SMA), currently around 1.2590, acted as a pivot and is once again being eyed by trend traders.
– The 50-day SMA, located around 1.2640, alongside recent swing highs, present short-term resistance to further gains.
*Momentum and Oscillator Readings*
– The daily Relative Strength Index (RSI) has bounced off the 40-level, moving back toward neutral territory at 50. This shift diminishes immediate concerns about oversold conditions.
– MACD (Moving Average Convergence Divergence) histogram bars are shrinking in the negative direction, hinting at ebbing bearish pressure.
– Short-term momentum suggests that, should GBP/USD clear resistance at 1.2650, an extended push to 1.2700 or higher is possible.
*Key Technical Levels to Watch*
– **Immediate resistance:** 1.2650 (50-day SMA and recent swing high)
– **Further resistance:** 1.2700 (psychological round number), 1.2720 (April swing high)
– **First support:** 1.2590 (200-day SMA)
– **Strong support zone:** 1.2530–1.2550 (March low and recent pivot area)
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**UK Economic and Policy Influences on GBP**
*Resilient UK Data, but Growth Remains Modest*
– The UK economy has generally shown resilience in the face of global uncertainty, with modest GDP gains and ongoing tightness in the labor market.
– Recent data releases, however, have been mixed, with softening PMIs offset by better-than-expected wage growth and steady inflation measures.
– The Bank of England’s recent communication has emphasized a cautious approach to monetary policy, with Governor Andrew Bailey signaling that policymakers need greater confidence inflation will remain sustainably at target before cutting rates.
*Bank of England’s Cautious Tone*
– Markets have pushed back expectations for the
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