**GBP/USD Price Forecast: Bulls Have the Upper Hand, Move Beyond 1.3500 Awaited**
*Based on the analysis by FXStreet’s Haresh Menghani*
The GBP/USD currency pair has exhibited notable strength in recent sessions, hinting that bullish pressures are gaining momentum. As the pair hovers around strategic resistance near 1.3500, market participants remain vigilant for technical signals and economic catalysts that could drive further appreciation. This comprehensive outlook dissects the recent price action, underlying fundamentals, and upcoming events influencing GBP/USD, aiming to equip traders and investors with actionable insights.
## Recent Price Action: Cable Finds Firm Support
Cable (a popular term for GBP/USD) started the week on a firm note, building on Friday’s recovery that saw the pair bounce from its lows near 1.3400. The pair lifted further as the new week unfolded, steadily edging toward the psychologically vital 1.3500 mark. This upward move occurs while the US Dollar Index (DXY) extends its retreat, weakened by diminishing yields on US government bonds and reduced expectations for immediate Federal Reserve monetary tightening.
### Key Technical Levels
– **Support Zone:** The pair has established demand just above 1.3400, an area constantly defended by GBP bulls.
– **Immediate Resistance:** Psychological and technical resistance is clustered near 1.3500.
– **Short-Term Trend:** Higher highs and higher lows since last week’s low point indicate sustained bullish momentum.
Technically, the breach of 1.3450 and strong buying interest above that level suggest the road to 1.3500 may be open. However, any clear break above 1.3500 is required to confirm continued upside potential.
## Macro Drivers in Focus
The upbeat sentiment for GBP/USD stems from a cocktail of international and domestic factors, shaping investors’ expectations for both currencies.
### 1. The US Dollar’s Weakness
The greenback’s retracement from recent highs is a principal driver. Several factors underlie this move:
– **Federal Reserve Outlook:** Recent US inflation and jobs data have encouraged some to expect the Fed’s rate hike cycle could pause in 2024. Interest rate expectations have softened due to the following:
– Softer-than-expected CPI figures.
– Cooling jobs reports.
– Dovish undertones in recent FOMC minutes.
– **Lower US Treasury Yields:** Benchmark 10-year yields have declined, sapping one of the key sources of demand for the dollar.
### 2. GBP-Specific Bullish Catalysts
Simultaneously, the British Pound is benefiting from its own domestic factors:
– **Hawkish Bank of England (BoE):** Policymakers have signaled caution in cutting rates too soon, citing sticky UK inflation and wage growth concerns.
– **Economic Activity:** Recent data indicates the UK economy may avoid a technical recession. Notably:
– Monthly GDP numbers are stabilizing.
– Consumer spending remains resilient during the winter months.
– **Political Stability:** Fears of sudden general elections have receded, providing a steadying backdrop for Sterling.
## Technical Analysis: Can Bulls Break 1.3500?
Technical studies underscore the pivotal nature of the 1.3500 resistance. Here is a breakdown of the key chart signals and what they imply for Cable’s next move.
### Price Structure
– **Short-Term Trend:** The four-hour and daily charts reveal persisting bullishness, with price action stepped up in a neat ascending channel.
– **Support and Resistance:** Immediate support rests between 1.3460 and 1.3440. A successful clearance of 1.3500, followed by 1.3530, would open the path toward 1.3600 and beyond.
### Oscillator Readings
– **Relative Strength Index (RSI):** The RSI is hovering above 50 on both intraday and daily timeframes but is not yet in
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