**GBP/USD Update: Resistance Persists Above the 1.3500 Level**
*Based on insights and analysis from Continuum Economics (original article authored by Continuum Economics team)*
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The GBP/USD currency pair (commonly referred to as “Cable”) has shown remarkable resilience during periods of uncertainty and volatility in global markets. As we approach the mid-2024 trading environment, understanding the dynamics surrounding the British pound against the US dollar becomes even more pertinent for traders, investors, and policy analysts. Using the analysis published by Continuum Economics, we examine the technical structure, market drivers, and implications for GBP/USD amid notable resistance around the 1.3500 level.
## **The Big Picture: GBP/USD Technical Overview**
The GBP/USD’s journey throughout 2024 has been dictated by:
– Shifting monetary policy stances in the United States and the United Kingdom
– Prevailing risk appetite in global financial markets
– Developments in macroeconomic data from both economies
A key element is the persistent inability of the pair to establish and maintain a sustained rally beyond the 1.3500 psychological and technical barrier, as chronicled in the recent Continuum Economics report.
### **Technical Analysis: Chart Patterns and Levels**
**Key Technical Observations:**
– The GBP/USD has frequently tested the area above 1.3500 but has failed to produce a daily close that firmly establishes bulls’ dominance.
– Price action analysis suggests that the 1.3500 zone acts as a formidable supply area, where sellers consistently overwhelm buyers, leading to repeated pullbacks.
**Support and Resistance Levels:**
– **Immediate resistance**: 1.3500–1.3550 remains the pivotal upside barrier. Breaks above this level have been fleeting and short-lived.
– **Support zones**: 1.3350–1.3400 offers reliable support, providing a floor for corrective pullbacks.
– **Secondary support**: Further downside is likely to encounter demand at 1.3250, coinciding with previous swing lows and trendline supports.
**Trend Analysis:**
– The price structure is characterized by a series of lower highs on the four-hour and daily charts, signaling subdued bullish momentum.
– The 50-day moving average, currently below the spot price, underlines the underlying medium-term uptrend, but the flattening slope indicates fading momentum.
– Momentum oscillators such as the RSI (Relative Strength Index) hover near neutral territory, suggesting neither oversold nor overbought conditions.
## **Macro Drivers Influencing the Pair**
**US Side: Federal Reserve Dynamics**
– The Federal Reserve’s June 2024 meeting kept markets on a cautious footing, with policymakers emphasizing data-driven decisions regarding future interest rate adjustments.
– Mixed signals from US inflation data and employment reports have contributed to volatility in the US dollar. While headline inflation has eased, core metrics remain above the Fed’s 2% target, tempering expectations of early rate cuts.
– Treasury yield movements, in response to evolving Fed guidance, directly influence GBP/USD’s price action.
**UK Side: Bank of England and Economic Data**
– The Bank of England (BoE) has signaled a sense of patience toward policy easing, citing uneven progress on inflation and wage growth.
– UK inflation remains sticky, particularly in services and retail sectors, causing the BoE to remain vigilant before committing to an interest rate reduction.
– UK GDP and employment data have surprised to the upside, mitigating recession fears and supporting the pound on dips.
**Geopolitical and Risk Considerations**
– Risk-on phases in global equities tend to favor the pound against the dollar, as the UK’s open financial markets attract capital.
– Ongoing geopolitical tensions or sudden spikes in market volatility often see safe-haven flows into the dollar, leading to GBP/USD declines.
## **Why 1.3500 Is a Critical Threshold**
**Psychological Importance:**
The 1.3500 level is a
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