GBP/USD Outlook: Bullish Momentum Intact as Buyers Target 1.3670

The GBP/USD currency pair continues to trade with a bullish bias within its broader yearly range. Despite downside pressure triggered by strong U.S. labor market data late last week, sellers failed to break below the Bullish Imbalance 32 support zone. This corrective pullback offered buyers an opportunity to establish long positions, keeping short-term momentum intact toward the primary resistance target near 1.3670.

Would you like to read more market analysis about GBP/USD, Smart, and Money?

Fundamental factors continue to support the British pound. The Bank of England recently implemented a unanimous interest rate hike, reinforcing a hawkish monetary policy stance. Market participants anticipate at least three rate increases from the Bank of England in total, compared to just one or two expected from the Federal Reserve, creating a favorable interest rate differential for Sterling over the coming months.

In contrast, the U.S. dollar's upside potential appears increasingly constrained. While geopolitical friction between the U.S. and Iran temporarily spurred safe-haven demand for the greenback, recent reports indicating potential diplomatic concessions and ceasefire progress have diminished risk-averse buying, easing pressure on the pound.

Technical Analysis and Key Levels

Never miss news-driven moves – use the News OCO Expert Advisor. Find out more.

From a technical perspective, the overall market structure favors buyers following a liquidity sweep below the June lows. The quick bullish reaction at Imbalance 32 confirms strong demand within the yearly trading range. Holding above this support zone preserves the bullish outlook, with long positions remaining justified ahead of the upper range boundary at 1.3670.

Upcoming Macroeconomic Events

The primary short-term risk event for GBP/USD is the U.S. Consumer Price Index (CPI) report, scheduled for release on Tuesday at 13:30 UTC. Inflation data will be closely scrutinized for insights into the Federal Reserve's policy path and is expected to drive significant market volatility during the second half of the trading session.

Automate and optimize your forex trading with RobotFX MT4/MT5 solutions. Visit us today for the best trading tools.