GBP/USD Analysis: Bullish Outlook Following Liquidity Sweeps

GBP/USD Market Overview

The GBP/USD pair has recently exhibited a strong recovery, potentially marking the beginning of a broader bullish trend. This reversal follows a period where the US dollar's strength appeared disconnected from fundamental developments, particularly following the resolution of geopolitical conflicts in the Middle East.

Fundamental and Monetary Policy Factors

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While the Federal Reserve maintains a hawkish tone, uncertainty persists regarding the timeline for potential interest rate hikes. Recent remarks from FOMC officials have failed to provide a definitive trajectory for monetary policy, and weakening US labor market data has caused participants to reassess the likelihood of immediate tightening. Given that any potential rate increase cycle may be limited to avoid stalling the US economy, the structural outlook for the US dollar remains subdued.

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Technical Structure and Liquidity

The pair successfully reached the 1.3322 target, supported by previous liquidity sweeps below the March 31 and April 6 lows. The market is currently consolidating between opposing imbalances, with the bulls appearing to hold a firmer position following the exhaustion of recent bearish pressure.

Outlook and Key Levels

The long-term outlook for the pound remains bullish. If the current momentum holds, the pair may look toward the May 1 and January 27 highs at 1.3656 and 1.3867, respectively. Conversely, should the market respond to bearish imbalances, a test of the 1.3139 low could occur, with the trend invalidation level set at 1.3007.

Forthcoming Economic Events

Market participants are closely monitoring upcoming US economic data, specifically the ISM Services PMI, for further direction. Additionally, the release of the ADP Employment Change on July 7 will be assessed, though analysts expect limited immediate impact on the overall market sentiment.

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