**The GBP/USD Breaks Critical Support: A Detailed Forex Analysis (03-09-2025)**
*Inspired by the analysis provided by economies.com. Credit to the original author.*
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## Overview
The British Pound against the US Dollar (GBP/USD) is one of the most widely watched pairs in the forex market, representing economic health and comparative strength between the United Kingdom and the United States. In early March 2025, the GBP/USD pair has shown a notable technical development: a breakdown below a critical support level. This technical event carries potential implications for short-term and medium-term price action and provides traders with key levels to monitor in the coming trading sessions.
This analysis explores the circumstances leading up to the breakdown, the technical context, price action scenarios, and fundamental factors that may further influence the movement of the GBP/USD. Drawing insights from the published analysis on economies.com, this article expands upon the implications and offers a comprehensive look at this significant market move.
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## Recent Price Action: Setting the Stage
In the preceding days, the GBP/USD had been consolidating within a tight range. The pair was previously supported at a major horizontal level that had historically acted as a floor, repelling declines and attracting buying interest. However, persistent bearish pressure and a series of lower highs suggested that sellers were gaining conviction.
**Key Observations:**
– GBP had attempted multiple rallies but faced resistance at 1.2670 and 1.2700 levels.
– The US Dollar Index (DXY) strengthened due to risk-off sentiment and expectations of tighter US monetary policy.
– Economic data from the UK failed to impress, with lower-than-expected PMIs and retail sales.
– The pair traded sideways but with a slightly bearish tilt, as each rebound was met by more aggressive selling.
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## The Critical Support Level
At the heart of this technical breakdown is a specific horizontal price level. According to the analysis from economies.com, the GBP/USD was anchored by support at the 1.2590 mark. This level has held significance for weeks:
– *Historically*, 1.2590 acted as both support and resistance, creating a psychological reference point for traders.
– *Technically*, multiple daily closes above this line had signaled potential reversals or periods of sideways consolidation.
– *Order flow*, as visible in order books, showed clusters of buy orders around this zone, indicating market participants’ confidence in its strength.
**Breakdown Circumstances:**
– The pair closed decisively below 1.2590 on increased volume.
– Stop-loss orders below 1.2590 exacerbated the momentum.
– The New York trading session saw further selling, driven partly by US economic data beats and hawkish Federal Reserve commentary.
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## Technical Factors
### 1. Momentum Indicators
Several key momentum indicators provided early warning signals of the impending breakdown:
– **Relative Strength Index (RSI):** RSI dropped below 40, moving out of the neutral zone and into bearish territory.
– **Moving Average Convergence Divergence (MACD):** The MACD histogram widened further in negative territory as the MACD line crossed below the signal line.
– **Stochastic Oscillator:** Generated a sell signal after failing to exit oversold territory, reflecting persistent downside pressure.
### 2. Moving Averages
– **50-day Exponential Moving Average (EMA):** Price action crossed below the 50-EMA, previously serving as a dynamic support level.
– **200-day Exponential Moving Average (EMA):** The 200-EMA at 1.2500 serves as a next potential target and long-term support.
### 3. Candlestick Patterns
– Series of bearish engulfing candles emerged as GBP/USD failed to reclaim 1.2670.
– No significant bullish reversal patterns detected near the breakdown, undermining confidence in any immediate bounce.
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## Fundamental Backdrop
Beyond technical considerations, fundamental drivers have played a decisive role in
Read more on GBP/USD trading.