GBP/USD Technical Outlook: Weekly Preview and Macro Analysis

GBP/USD Market Analysis

The GBP/USD pair maintains a bullish trajectory, supported by a broader downtrend in the US dollar. Technical analysis across 4-hour, daily, and weekly timeframes suggests a continuation of the upward momentum, as market participants anticipate a persistent softening of US monetary policy.

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Currently trading near 1.3633, the pair is within striking distance of its four-year highs. The prevailing market sentiment reflects a secular shift away from the dollar, a trend that has gained traction since 2022 and has been further influenced by recent US political developments.

Monetary Policy and Fundamental Drivers

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Divergence between the Bank of England and the Federal Reserve remains a key narrative. While the Bank of England may implement rate hikes due to inflationary pressures, the Federal Reserve faces increased uncertainty following recent appointments to the FOMC. Market analysts are closely watching how new committee members may influence future voting patterns despite Chair Jerome Powell’s continued leadership.

Key economic data releases are expected this week, including the US inflation report and the UK's first-quarter GDP estimate. While higher-than-expected inflation in the US might not necessarily trigger tighter policy, the UK GDP data will provide critical insight into the resilience of the British economy.

Technical Indicators and Levels

Volatility for the GBP/USD pair averaged 88 pips over the last five trading days. For the upcoming session, the expected trading range is defined by the 1.3545 and 1.3721 levels, with linear regression channels signaling a recovery of the bullish trend.

Nearest support levels are identified at 1.3611 (S1), 1.3550 (S2), and 1.3489 (S3). On the upside, resistance is positioned at 1.3672 (R1), 1.3733 (R2), and 1.3794 (R3). Traders should monitor the moving average as a key threshold for trend confirmation.

Trading Recommendations

Long positions remain favored while the price maintains its position above the moving average, with a technical target set at 1.3916. Conversely, a sustained break below the moving average would provide a technical basis for considering short positions, with primary targets at 1.3489 and 1.3428.

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