GBP/USD Range-Bound as Pound’s Strength Meets Dollar’s Recovery

The GBP/USD pair remains indecisive, trading within a tight range just below the key level of 1.3100 during the Asian session on Monday.

Written by: Arslan Butt • Monday, July 17, 2023 • 2 min read

• Last updated: Monday, July 17, 2023

The GBP/USD pair remains indecisive, trading within a tight range just below the key level of 1.3100 during the Asian session on Monday. Although the current spot prices are near the highest level since April 2022, around 1.3140, which was reached on Friday, the pair shows signs of sustaining its recent upward trajectory over the past couple of weeks.

While the US Dollar (USD) struggles to take advantage of its slight rebound from a 15-month low, as expectations of the Federal Reserve (Fed) ending its rate-hiking cycle after the anticipated 25 basis points lift-off in July continue to firm up, the British Pound (GBP) remains well supported. The GBP gains support from growing expectations of a more aggressive policy tightening by the Bank of England (BoE) to address high inflation. This suggests that the GBP/USD pair is likely to continue its upward trend, and any significant corrective decline may be seen as an opportunity to buy.

From a technical standpoint, the breakout above a resistance level marked by the upper boundary of an ascending channel that has been in place for nearly a month confirms the positive outlook. However, the daily chart’s oscillators are showing slightly overbought conditions, which is currently deterring traders from initiating new bullish positions on the GBP/USD pair. With no significant macro data from the UK, it would be wise to wait for consolidation or a modest pullback before considering further short-term appreciation for the pair.

For immediate support, the region of 1.3040-1.3035 is likely to play a role, followed by the psychological level of 1.3000. A decisive break below this level might trigger technical selling, potentially leading the GBP/USD pair towards the next relevant support near the 1.2930 horizontal zone. However, any subsequent decline could attract new buyers around the round figure of 1.2900, which should help limit the downside as spot prices approach the 1.2850 horizontal resistance breakpoint.

On the upside, bulls may seek confirmation of continued buying momentum above the 1.3140 region, the multi-month peak. If this level is surpassed, the GBP/USD pair could gain momentum towards the 1.3200 mark, potentially extending the uptrend to the intermediate hurdle of 1.3250-1.3260. Above this level, spot prices appear poised to climb further and reclaim the 1.3300 mark for the first time since March 2022.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.