After pulling back from its peak levels in 2025, GBP/USD is quickly nearing potential support areas.
The question is, will these levels generate enough buying interest to prolong the current upward trend of the pair?
Let’s delve into the details of the 4-hour chart to find some hints:
The British pound has displayed notable strength against the U.S. dollar, even as the dollar showed dominance across other major currencies. Market participants are seemingly optimistic about the prospects of the Trump-Starmer meeting leading to beneficial trade arrangements or avoiding the tariffs that have hit other U.S. trading partners.
The upcoming release of the U.S. PCE inflation report might fuel a rally for GBP/USD, particularly if it indicates a cooling off in inflation. Softer inflation data could accelerate the Federal Reserve’s timeline for rate cuts, potentially weakening the dollar further.
Keep in mind that market trends and volatility are often rooted in fundamental factors. If you’re not up to speed on the economic conditions influencing the U.S. dollar and British pound, this is a crucial moment to consult the economic calendar and stay informed on daily fundamental developments!
Currently, GBP/USD has dipped lower from its 2025 highs around the 1.2700 mark and is now trading just below 1.2600.
There’s a confluence of support elements at play around this level. For instance, the 1.2570 zone aligns with the S1 (1.2570) Pivot Point and the 38.2% Fibonacci retracement of the upswing that took place in February.
In addition, the psychological level at 1.2500 is close to the S2 (1.2509) Pivot Point, the 100 SMA, and the 50% Fibonacci retracement on the 4-hour chart. More significantly, it’s near the ascending channel support that’s been intact since mid-January.
Keep an eye out for consolidation patterns and bullish signals at these levels. Such indicators might lead to increased buying activity and further the 2025 uptrend of GBP/USD.
Conversely, if we see bearish candlesticks and continued downward movement, GBP/USD risks falling below the critical 1.2500 level. Should this happen, watch for sustained trading beneath the channel and the 200 SMA, as this could bring about retests of significant psychological levels like 1.2400, if not revisiting the previous lows near 1.2300.
Always be vigilant for other high-impact factors that might sway overall market sentiment, and remember to ensure proper position sizing in your trading approach!
