**GBP/USD Tilts the Bias Back to the Upside**
*Based on analysis by Greg Michalowski, InvestingLive.com.*
## Executive Summary
The GBP/USD currency pair has recently shifted its technical bias to the upside, amid a reinvigorated bullish sentiment in the market. Following a short-lived corrective decline, sterling has found strong support at key technical levels, prompting traders and analysts to revisit the bullish case. This article discusses the technical picture, relevant economic drivers, key levels to watch, and what could shape GBP/USD’s trajectory in the near to medium term.
## Technical Overview
GBP/USD has exhibited a notable turnaround after enduring selling pressure earlier in the month. Recent price action shows the pair reclaiming important support and resistance zones, which sets the stage for a potential upward continuation.
### Key Technical Developments
– The pair bounced off the 200-hour moving average, which provided a platform for fresh buying interest.
– GBP/USD managed to break above the 1.2700 psychological barrier, an area that now holds as interim support.
– Bullish momentum increased as the price traded above ascending trendline support visible on the hourly chart.
– The 100-hour moving average was also reclaimed, further adding to the confirmation of a short-term trend reversal.
– Price action has remained constructive while holding above both moving averages, keeping the bias positive in the immediate term.
### Significant Support and Resistance Levels
– **Immediate support**: 1.2700 (psychological level and previous congestion zone)
– **Major support**: 1.2670–1.2680 (confluence of 100- and 200-hour moving averages)
– **Short-term resistance**: 1.2760–1.2770 (recent cycle highs and minor chart resistance)
– **Key resistance**: 1.2800 psychological level, followed by 1.2840 (prior swing highs)
## Price Action Analysis
The pair’s recovery from the 1.2670 area was swift, as buyers leveraged key technical thresholds to re-enter the market. Candlestick patterns near this region hinted at accumulated buy orders, signaling the potential for a rebound.
– GBP/USD initiated a rally after forming a base above the 1.2670 region.
– Bullish candlesticks and higher lows confirm the presence of confident buyers.
– The break of the 1.2700 handle was accompanied by increasing trading volumes, adding conviction to the rally.
– With price now consolidating near 1.2760, bulls are eyeing a potential breakout towards the 1.2800 level.
## Fundamental Catalysts
Ongoing market dynamics continue to influence the sterling, with monetary policy divergence, economic data releases, and shifting risk sentiment all playing crucial roles.
### Drivers Supporting Sterling
– Better-than-expected UK economic data has reassured investors about the nation’s near-term growth prospects.
– The Bank of England maintains a comparatively hawkish policy outlook relative to peers, underpinning demand for the pound.
– Improved risk appetite in global markets has strengthened the appeal of risk-sensitive currencies like GBP.
### Potential Risks and Headwinds
– Any significant deterioration in UK macroeconomic indicators could reverse GBP gains rapidly.
– Geopolitical tensions or flight-to-safety moves might trigger a renewed bid for the US dollar, weighing on GBP/USD.
– Surprising dovish commentary from the Bank of England could limit further upside.
## Macro Perspective
Heading into the latter part of the year, currency markets remain hyper-sensitive to monetary policy expectations and economic releases, particularly inflation and labor data.
– The Fed’s stance remains a wild card, with markets keenly attuned to any hints of future rate adjustments.
– UK inflation appears to be stabilizing, bolstering BOE’s argument for a prolonged period of restrictive rates.
– Divergence between central bank policy paths is likely to create volatility and present trading opportunities in the GBP/USD pair.
## Trader Positioning and Sentiment
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