GBP/USD Eyes 1.3712 After 150-Pip Rally—Will Fed or Bailey Break the Streak?
The British pound surged this week, with GBP/USD climbing nearly 150 pips to reach 1.3625, as risk sentiment improved and U.S. rate-cut...
Quick overview
- The British pound surged this week, with GBP/USD climbing nearly 150 pips to reach 1.3625 due to improved risk sentiment and U.S. rate-cut expectations.
- Traders are awaiting comments from Bank of England Governor Bailey and Fed Chair Jerome Powell, which could influence near-term policy bets.
- Technically, GBP/USD is approaching a key Fibonacci resistance zone, indicating a potential battleground for bulls and bears.
- Aggressive traders may consider entering long on a confirmed breakout above 1.3668, while conservative traders should wait for a retest of the 1.3550–1.3580 support zone.
The British pound surged this week, with GBP/USD climbing nearly 150 pips to reach 1.3625, as risk sentiment improved and U.S. rate-cut expectations gained traction. Sterling’s rally coincides with softening U.S. inflation data and dovish Fed commentary, pushing the dollar index (DXY) down over 1%.
Traders now await critical comments from Bank of England Governor Bailey and Fed Chair Jerome Powell, both scheduled to speak later today, potentially shaping near-term policy bets.
On the macro front, upbeat U.S. consumer confidence data (99.4 vs. 98.0 expected) and mixed manufacturing numbers (Richmond Fed at -10 vs. -9 forecast) added to the backdrop. Sterling, however, stayed resilient, supported by improving technicals and a decisive shift in sentiment.
GBP/USD Technicals Flash Overbought—But Not Finished
Technically, GBP/USD is pressing into a key Fibonacci resistance zone, ranging from 1.3631 (2.0 extension) to 1.3667 (2.272 extension), often a battleground for bulls and bears. Price also cleared a descending trendline from June highs, marking a structural shift in short-term trend dynamics.
- EMA Signal: The pair reclaimed the 50-period EMA at 1.3500—now acting as dynamic support.
- Candlestick Structure: Three white soldiers followed by a bullish engulfing candle show strong buyer intent.
- MACD: The MACD remains in bullish territory with widening histogram bars, though traders should watch for signs of divergence or fading momentum.
Despite the strength, a long upper wick near 1.3631 suggests some selling pressure. A spinning top or doji in this area may signal buyer fatigue.
GBP/USD Trade Setup: Breakout or Retracement?
Aggressive Trade Idea:
Enter long on a confirmed 4-hour candle close above 1.3668. First target: 1.3712 (2.618 Fib). Stop-loss: just below 1.3581.
Conservative Trade Idea:
Wait for a retest of the 1.3550–1.3580 support zone. Watch for bullish reversal candles (e.g., hammer, bullish engulfing) as confirmation of an entry.
Key Events to Watch Today:
- 10:00 GMT & 16:00 GMT – BOE Gov Bailey Speaks
- 14:00 GMT – Fed Chair Powell Testifies
- 14:00 GMT – U.S. CB Consumer Confidence
- 14:00 GMT – Richmond Manufacturing Index
Until a clean breakout occurs, GBP/USD remains in a delicate zone. With central bank narratives shifting, today’s events could tip the scale for either a deeper rally or a corrective pullback.
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