GBP/USD Buyers Aim to Sustain Uptrend After BoE Rate Decision

Market Overview

The British pound has been steadily gaining against the US dollar, marking its fifth consecutive day of strength. This bullish momentum follows the Bank of England’s (BoE) decision to keep interest rates unchanged at last week’s meeting.

As investor sentiment around the UK economy remains relatively positive, the BoE’s cautious stance on rate cuts appears to have provided some support to the pound. This stability, coupled with weak European economic performance, has allowed the GBP to capitalize on the broader dollar weakness seen recently.

Weaker-than-expected PMI data from Europe has weakened the euro, driving EUR/GBP to its lowest levels in two and a half years. This has further bolstered demand for the pound, particularly as it outperforms in cross-currency pairs, such as against the euro.

Technical Analysis

On the four-hour chart, GBP/USD has resumed its uptrend after breaking through the 1.33398 resistance level. Holding above this key level opens the path for further gains, with the next targets set at 1.33956 and 1.34316. Momentum indicators, such as the RSI, are signaling that the pair has entered overbought territory, which could point to a potential slowdown in upward momentum. The convergence of the Bollinger Bands also suggests that the bullish trend may face resistance soon.

Alternative Scenario

If buyers lose control and the pair falls below 1.33398, selling pressure could increase, pushing the price toward the lower support levels at 1.32939 and 1.32480. A decisive break below 1.32480 would indicate a possible trend reversal, challenging the broader bullish structure.

Key Levels Overview

• Resistance Levels:
  • Resistance 1: 1.33778
  • Resistance 2: 1.33956
  • Resistance 3: 1.34316
• Current Price: 1.33655
• Support Levels:
  • Support 1: 1.33398
  • Support 2: 1.32939
  • Support 3: 1.32480

Key Events to Watch

Although there are no major UK-specific events in Tuesday’s economic calendar, investors will be closely watching the US Consumer Confidence report and Fed Board Member Michelle Bowman’s speech. If consumer sentiment improves as forecasted, it could bolster the dollar and weigh on GBP/USD. Additionally, any signals from the Fed regarding future monetary policy could shift the dollar’s trajectory, impacting the pair’s near-term movement.

Conclusion

GBP/USD continues to trade with bullish momentum, fueled by the BoE’s recent rate decision and weaker economic data from Europe. However, technical indicators suggest the rally may face headwinds, especially as RSI approaches overbought levels. The key resistance at 1.33778 remains in focus for buyers, with a potential path toward 1.34316 if momentum persists. On the downside, 1.33398 is a critical support level to watch, with a break below 1.32480 signaling a possible trend reversal. Traders should monitor upcoming US data for potential catalysts that could impact the pair’s next move.